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NCB Republic of Ireland Services PMI March 2010
Business activity continued to fall in February, while intense competition led to further reduction in charges.
This survey covers all private sector services in Ireland, excluding retail and wholesale, and provides timely data on an area of the economy that is not well covered by official figures. The data are derived from questionnaires sent to a representative panel of around 600 Irish private-sector service companies. Monthly data have been collected since May 2000.
Business Activity Although business activity continued to fall in February, the rate of contraction eased to its weakest in the current twenty-five month period of decline. The ongoing fragility in the Irish economy was the main factor behind the reduction in activity as new orders fell further during the month.
Confidence Irish service providers expect business activity to be higher in twelve months’ time, with panellists predicting an improvement in economic conditions and a subsequent increase in confidence among clients. While sentiment remained elevated it was still weaker than the long-run series average.
New Business Clients remained reluctant to commit to new projects in February. Consequently, new orders at Irish services companies fell further during the month, albeit at a weaker pace than in the previous month.
New Export Business The fall in total new business was recorded despite another increase in new export orders, which were boosted by strengthening demand from the UK. New business from abroad has risen in each month since last September.
Backlogs of Work Outstanding business decreased for the thirtieth successive month in February. Falling backlogs reflected the completion of existing projects, with insufficient new business to compensate.
Employment As has been the case throughout the past two years, employment fell at Irish services companies in February. Furthermore, the rate of job cuts accelerated during the month as firms adjusted their workforces in line with falling new business.
Input Costs Lower salary payments were the main factor behind a drop in input costs in February, while competition among suppliers enabled service providers to negotiate discounts. The pace of decline remained sharp, despite easing to the weakest in the current fourteen-month sequence of reduction.
Charges Output prices fell at the fastest pace in three months during February. Anecdotal evidence suggested that intense competition was the principal cause of the latest reduction. There were also some reports that lower input costs had been passed on to clients (see page 5).
Profitability Reduced charges led to a further substantial decline in profitability in February, along with falling sales. Profits at Irish service providers have now decreased in each of the past twenty-six months.
Related:
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