Irish services industry growth continues
The Irish services industry expanded for the second month in a row, according to figures released today.
The seasonally adjusted Business Activity Index increased to 52.4 in May, from 51.0 in the previous month.
The pace of growth in activity remained modest, but accelerated to the sharpest since December 2007. Higher activity largely reflected increased new business.
Amid signs of strengthening economic conditions and improving client confidence, business sentiment increased to its highest in more than two-and-a-half years.
Service providers have posted optimism regarding the future path of business activity in each of the past 13 months.
Although weaker than the long-run series average, the rate of expansion was the sharpest since December 2007.
Panellists indicated that marketing activities had helped to generate new business. New export orders continued to rise markedly during May, and at a faster pace than that registered for overall new business.
New orders from abroad have now increased in each of the past nine months.
Despite rising new business, Irish service providers reduced backlogs of work further in May, extending the current sequence of depletion to 33 months.
Staffing levels also continued to decrease, as the modest rise in new business seen in May remained insufficient to justify additional staff. However, the rate of job cuts eased to the weakest since May 2008.
Lower salary payments were the key factor leading to another reduction in input costs during May.
Although input prices fell solidly since the previous month, the rate of decline eased to the slowest in the current seventeen-month sequence.
Output prices also fell again in May, as has been the case in each month since August 2008. The rate of decline was substantial as intense competition forced companies to reduce charges in an attempt to secure new business.
Commenting on the NCB Republic of Ireland Services PMI survey data, Brian Devine, economist at NCB Stockbrokers said: "The services PMI which breached the 50 mark in April advanced further in May. Activity rose across three of the four broad sectors monitored by the survey.
"The only sector to post a decline in activity during May was Transport & Leisure. The weak euro, however, should be a boost for tourism and exports more generally in the coming months.
"The Euro-area sovereign debt worries, which are weighing on financial markets, do not appear to be affecting the mood in the real economy.
"Confidence at Irish service providers rose to its highest level in two years with new orders continuing to rise."
