Service Activity Continues Expanding in February
Irish service providers benefited from improving economic conditions in February, seeing further sharp rises in activity and new business and recording an improvement in business confidence, according to the Investec Services PMI for Ireland, released on Friday. Higher workloads encouraged companies to increase their staffing levels again, the report said, while inflationary pressures eased slightly, but remained marked as a number of firms commented on rising staff costs.
The seasonally adjusted Business Activity Index, based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago, posted 60.6 in February, down only slightly from 61.0 in January and pointing to a further sharp increase in business activity. Higher new orders and increased marketing reportedly contributed to growth of activity, but the main factor behind the expansion was improving economic conditions.
Panellists expect further improvements in the Irish economy over the coming year, thereby leading to optimism regarding the outlook for business activity. Business sentiment picked up slightly from that seen at the start of 2017.
Service providers posted a further substantial monthly increase in new business, with the rate of growth only fractionally slower than in January. A number of respondents mentioned stronger market conditions. The rate of expansion in new export orders accelerated in February and was the sharpest since July last year.
Growth of new business imparted capacity pressure on service providers, resulting in a further build-up of backlogs of work. The latest rise was marked, albeit the slowest since last November.
Rising workloads and business expansion plans contributed to a further increase in employment during February. Moreover, the rate of job creation was faster than that seen in the previous month.
Input prices continued to rise sharply, despite the rate of inflation easing for the second month running. According to respondents, rising staff costs had been the main factor behind higher input prices, while increases in fuel costs and prices charged by suppliers were also mentioned.
Higher input costs and efforts to raise prices amid improving client demand led to a further increase in output charges. The latest rise in selling prices was marked, but the weakest in three months.
The full report can be accessed here.
