Growth of activity in services sector at weakest level since November 2017

Activity growth among Irish service providers slowed in December for the third consecutive month, and was the weakest since November 2017, according to the latest Services Business Activity Index (BAI) from IHS Markit.

The BAI, an indicator designed to provide a single-figure measure of the health of the services industry, posted 56.3 in December, down from 57.1 in November.

Any reading above 50 shows growth.

Contrary to the weaker expansion in business activity, new order growth among service providers quickened in December, as panellists indicated that they had seen greater customer interest in their services.

New export business also expanded at a faster pace in December, as firms saw an overall pick-up of international demand, especially from the UK.

On the employment front, Irish service providers continued to create jobs at a sharp rate.

The level of outstanding business among service providers increased further in December.

However, the rate of backlog accumulation weakened to its slowest in 27 months, as the sharp increase in headcounts enabled firms to make some headway through their work-in-hand, according to the Index.

Input cost inflation quickened to a four-month high in December, as service providers grappled with rises in fuel, utility and insurance bills. Higher staff costs were also reported.

Selling price inflation moderated from November’s three-year high but still rose at a marked rate amid efforts to pass on higher cost to customers.

Looking forward Irish service providers were optimistic that business activity will increase over the coming 12 months, with around 42pc of panellists predicting a rise in activity over the coming year.

Expectations of greater customer orders, a recovery in the domestic economy and increased business from abroad were cited as reasons to be optimistic.

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