04 Dec 2019 | 11.28 am
Services Bounce Back From October ‘Aberration’
'Services sector in good shape'
04 Dec 2019 | 11.28 am
The November Services PMI from AIB shows that service providers saw a solid increase in business activity, and the rate of increase recovered from October’s 87-month low to being the fastest in three months.
Business confidence rose to its highest level in the sector since June, with new orders up and employment growth the most marked in five months as a result. On the downside, both input costs and output prices increased at sharper rates than in the previous month.
The headline seasonally adjusted Business Activity Index posted 53.7 in November, up from 50.6 in October. Growth occurred across all four broad sectors and was highest in financial services. In terms of new orders, business services led the growth table, with the increase in new orders coming from existing customers as well as successful marketing efforts.
The rate of job creation the fastest since June. Where employment rose, panellists reported hiring staff as a result of receiving greater customer orders. The TMT sector posted the strongest expansion in staffing levels during November, while transport and leisure companies cut numbers slightly.
The rate of inflation in input prices was also the fastest in six months. This was linked to higher fuel and insurance costs, with reports of higher wage bills. In line with all this, service providers increased their output prices at a faster rate during November.
The PMI Composite Index was 52.0 in November, up from 50.6 the previous month. This measure of private sector activity also recorded its highest growth since June, but the figure includes a further decline in manufacturing output, the fourth in five months. Factory job numbers were down, offsetting to some extent the improvement in services.
Chief economist Oliver Mangan (pictured) stated: “Activity expanded in all four of the broad service sectors covered in the survey. Financial services saw the strongest growth, with the activity index hitting a nine-month high. Solid growth was also registered by business services firms and companies in the technology/media/services sector, with activity in both reaching its highest level since the summer.
“Most encouragingly, both new export orders and total new orders posted solid increases. The recovery in new export orders seen in October and November is particularly welcome as they had weakened a lot during the third quarter.
“There was also a further good improvement in business confidence, which had also weakened during the third quarter. Overall then, this report indicates that the services sector of the Irish economy is in good shape, despite the challenges posed this year by Brexit uncertainty and weakening global growth.”