Growth in Ireland’s services strengthened in March, a survey showed on Tuesday, but new business from abroad expanded at the slowest pace in almost four years as weaker sterling affected some exporters.
The Investec Purchasing Managers’ Index (PMI) of activity in services rose to 62.8 from 62.1 in February and back towards the 64.0 it reached at the start of the year, the highest since June 2006, at the height of the “Celtic Tiger” economic boom.
The index, which covers businesses from banks to hotels, has risen for more than three and a half years of unbroken growth, denoted by a reading over 50, and been above 60 for most of that time.
However, the sub-index measuring new export business, which in November was at a 12-month high, slipped to 54.0 from 57.1 the previous month, its lowest level since May 2012, when Ireland was in the middle of a three-year international bailout.
Irish exporters are particularly vulnerable to movements in sterling, since Britain is the country’s largest trading partner, and the pound has lost around 12pc of its value against the euro since November.
“While panellists indicated that the UK remained a source of new business, there were suggestions that the recent strengthening of the euro against sterling had weighed on growth of new business,” said Philip O’Sullivan, Chief Economist at Investec Ireland.
“Despite the moderation in new orders and (we suspect related) global uncertainty, business sentiment ticked higher in March, with 19 times as many panellists expecting a rise in activity over the next twelve months as opposed to those who anticipate a contraction.”
A sister survey on Friday showed Irish manufacturing growth rebounded to an eight-month high in March.
“Taken together, the services and manufacturing PMIs suggest that the pace of growth across much of Ireland’s private sector improved slightly at the end of Q1 2016,” O’Sullivan said.
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