5th Nov 2019 07:52
(Alliance News) - Ireland registered its lowest new business growth in the services industry in over seven years in October, IHS Markit said on Tuesday.
The AIB services purchasing managers index stood at 50.6 in October, weakening from 53.1 in September. This was the slowest increase in business activity since August 2012, IHS Markit said.
Any reading above 50 denotes expansion, and any figure below 50 means contraction.
The main cause was a weakening of customer demand, with new order growth "marginal" with some surveyed saying Brexit uncertainty was hurting demand. New business from abroad did, however, return to growth.
Looking ahead, IHS Markit said business confidence is at its best in three months, after an eight-year low in September. However, optimism remains subdued due, in part, to Brexit.
"The October reading points to just a small rise in business activity in the month. There has been a similar weakening in new business activity in recent months, with again just a small increase being recorded in October," said Oliver Mangan, chief economist at AIB.
"However, other components of the October survey were more positive. New export orders picked up their best level since June. Employment growth was strong, again rising at its fastest pace in four months. There was also a good improvement in business confidence following two months of lower figures, while backlogs of outstanding orders continued to rise, albeit modestly."
"The impact of on-going Brexit uncertainty was evident, with some firms saying it has caused a fall in customer orders, with reports it is weighing on business sentiment," Mangan continued.
"Overall, the slowdown evident in manufacturing this year would now appear to have spread to the services sector. The data point to an appreciable deceleration in the pace of activity in the Irish economy in recent months as it is buffeted by uncertainty over Brexit and weakening global growth."
By George Collard; [email protected]
Copyright 2019 Alliance News Limited. All Rights Reserved.