Services sector growth eases to 11-month low

GROWTH in Ireland’s services sector eased to its lowest in almost a year last month.

A drop-off in optimism was also recorded in October, with service providers the least confident since September 2016, according to the latest Purchasing Managers’ Index (PMI).

But total new business increased at a substantial pace, with the rate of growth accelerating from the previous month.

“Somewhat puzzlingly, the forward-looking Business Activity: Expected Levels in 12 Months’ Time index weakened to its lowest since September 2016 in spite of the stronger client orders,” said Philip O’Sullivan, economist with Investec, which produces the report.

“A number of respondents expressed concerns about customer sentiment, although it should be noted that nearly six times as many firms expect growth compared to those who expect a moderation in business activity over the coming year.

“Given the favourable economic outlook for the majority of Ireland’s key trading partners and the domestic economy, we are in the camp of those who expect 2018 to be another year of progress for the services industry.”

The rate of expansion of business activity eased in October, as signalled by the seasonally adjusted Business Activity Index dipping to 57.5 from 58.7 in September. Meanwhile, data on the UK services sector suggest the economy may be picking up speed. Its PMI jumped to 55.6 in October from 53.6 in September.