Growth slowed in Irish services sector in November

Ireland’s services sector expanded at the slowest pace in 12 months in November due to weaker domestic demand, a survey showed on Tuesday.

The Investec Services Purchasing Managers' Index (PMI) eased to 56.0 in November from 57.5 a month earlier. The index has, nevertheless, held comfortably above the 50 mark that separates growth from contraction since August 2012, when Ireland was halfway through a three-year financial bailout programme.

Like the wider economy, services companies have so far proved resilient to neighbouring Britain's vote to leave the European Union. However, while new export orders remained firm in November, growth in new orders overall fell to its lowest level in 12 months, the survey showed.

Yet managers remained optimistic, with business sentiment ticking up slightly in the month.

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“Despite the slightly slower pace of current growth implied by the headline PMI, Irish services firms remain upbeat about the outlook for the sector,” said Investec Ireland chief economist Philip O’Sullivan. “A number of panellists expect new export orders to be a key driver of growth in 2018 and, given the improving international backdrop, we think that this is a very reasonable assessment of the sector’s prospects.”

Elsewhere in Europe, Spain’s service sector grew in November, albeit at a slightly slower pace than a month earlier. Uncertainty over the situation in Catalonia appeared to weigh on demand, and the PMI figure came in at 54.4 in November, down from 54.6 in October.

Three-month low

In Germany the services sector growth slowed to a three-month low in November as a political impasse following Chancellor Angela Merkel’s failure to form a new three-way coalition clouded the outlook for business. The final PMI for November stood at 54.3.

Both Italy and France saw growth in the sector, with Italian PMI increasing to 54.7 from 52.1 and French PMI rising to 60.4 in November from 57.3 in October.

In China services sector activity picked up to a three-month high in November, buoyed by a solid rise in new business, though the rate of expansion remained moderate and weaker than the long-run trend. PMI rose to 51.9 in November, up from 51.2 in October and the highest reading since August. – Reuters