The latest NCB Services PMI shows that Irish service providers recorded another increase in business activity during February, albeit at the slowest pace of growth since August 2012. While the headline Business Activity (53.6) index reading is below the 5 year high of 56.8 recorded in January, it nonetheless represents a seventh successive month of expansion for the sector. Furthermore, unadjusted data show that all four sectors represented in the index (Business Services, Financial Services, TMT and Transport & Leisure) recorded growth during February.
Within the data we see that New Business remains in expansionary territory, with panellists reporting growth in demand from both existing clients and new customers. There was a moderation in the pace of growth in Exports during February, however, this must be considered in the context of January’s outturn, which represented the fastest growth rate in the history of the series (starting June 2002). It was a similar story on the Employment side, with the growth rate slowing during February but remaining above the critical 50 level for a sixth successive month.
The latest news on the pricing front was somewhat discouraging, with input prices increasing (panellists cited pressure from utility and fuel costs) yet again, as they have done in every month since December 2010, while output prices remained in negative territory (albeit only marginally) in February, as they have done in every month since July 2008. This mismatch has weighed on profitability in the services sector.
In all, while most components reported a slowdown in growth during February, we note that the “Business Activity: Expected Levels in 12 Months’ Time” index improved to its highest level since November, which may suggest that the coming months will see an uptick in the headline Services PMI from here.