Strong January Growth For Services Sector

05 Feb 2018 | 10.41 am

Strong January Growth For Services Sector

Technology, media and telco firms lead growth spurt, says Investec

05 Feb 2018 | 10.41 am

Growth in new business among services sector firms hit a three-month high in January, according to Investec. The technology, media and telecoms (TMT) sector recorded the sharpest growth in new orders in January.

Investec’s Services PMI for January recorded a headline figure of 59.8, slightly down on the 60.4 recorded in December 2017.

Despite growth in new export business moderating to the slowest since August, the pace of expansion in overall new business quickened to a three-month high during January.

Of those businesses surveyed by Investec, almost 30% indicated higher new business, citing new contracts, favourable economic conditions and the launch of new services. By comparison, 16% of survey participants reported lower sales at the start of 2018.

Investec also found that new business from external sources continued to increase in January, stretching the current period of growth to 14 months. However, financial services companies recorded a drop in new export orders for the second time in the past three months.

TMT firms again recorded the sharpest expansion in new export business orders in January. There was an improvement too in new export orders for the transport and leisure sector. Elsewhere, while the rate of growth slowed for business services companies, new business from abroad still rose solidly in the sector.

Job creation remained evident across the four broad categories assessed by Investec during January. Business services and transport and leisure firms recorded faster growth in employment.

The strongest increase in staffing levels was seen among TMT businesses. Meanwhile, employment growth among financial services firms eased for the third month running in January, the weakest growth in a year-and-a-half.

Investec noted that the rate of input cost inflation remained very sharp. Fuel, insurance, labour and raw materials prices all contributed upward pressure to firms’ cost bases in January.

Nearly one-fifth of services companies raised output prices last month, with the primary motive being to protect margins in the face of the aforementioned rising costs.

Positive sentiment among businesses into 2018 was broad-based, with all four services sector segments expressing positivity. “Given the improving global backdrop, we think that Irish services firms are right to be upbeat on their future prospects,” said Philip O’Sullivan (pictured), economist with Investec.

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