Business activity in the Irish services sector, which accounts for about 70 per cent of the economy, hit a six-month high in December as the threat of a no-deal Brexit receded and businesses “regained momentum”.
The latest AIB services purchasing managers' index (PMI) suggested new business and total activity rose at the fastest rates since June, leading to sustained employment growth and rising levels of "outstanding contracts" in the sector.
As a result, the headline index rose to 55.9 in December, up from 53.7 the previous month and 50.6 in October.
AIB’s activity index for the sector, which covers everything from hotels and hairdressers to IT firms and telecoms, had registered its slowest rate of growth in more than seven years in October as the UK’s Brexit process teetered on the brink of collapse.
Outperform
Broken down by sub-sector, the data revealed that the financial services here continued to outperform in terms of total activity growth at the end of 2019 while the business services and the technology, media and telecoms (TMT) sectors also recorded strong increases in activity.
In contrast, the travel, tourism and leisure segment, which has suffered from a a decline in UK visitor numbers, registered a decline for the fifth time in eight months.
Underpinning the pick-up in total activity in December was a strong increase in new business, the report said, noting that new work has risen every month since August 2012, and that the rate of expansion in December was the fastest in six months.
Rebound
Nonetheless it said the new work subcategory remained weaker than the trend shown over the past seven years. This is partly explained by weak international markets relative to domestic demand, it said. New export business increased at a faster rate in December, it said.
"The rebound seen in November has continued – the index rose to 53.7 in that month, up from a seven year low of 50.6 in October," AIB chief economist Oliver Mangan said. "The recovery in activity has been driven by stronger domestic orders in particular, with a pick-up in new export orders also helping," he said.
