Ireland services sector continues fall in February but hopeful signs

(Alliance News) - The Irish services sector kept a barometer of the country's overall private ...

Alliance News 3 March, 2021 | 6:47AM
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(Alliance News) - The Irish services sector kept a barometer of the country's overall private sector in decline in February, but optimism improved with the end in sight for coronavirus lockdown restrictions.

The AIB Ireland services purchasing managers' index score for the business activity index was 41.2 points last month, up from 36.2 in January, but still indicated a sharp slowdown in services output, said lender AIB and data provider IHS Markit on Wednesday. The neutral reading in the PMI index is 50.

However, the 12-month outlook expressed by service businesses surveyed brightened, with firms expecting a revival once vaccination campaigns prompt the government to lift curbs.

The worst hit services sector in February was Transport, Tourism & Leisure, while the Technology, Media & Telecom sector posted its fastest decline in output since last May. Faring better was Financial services, which registered no change in activity in February, with a neutral score of 50.

The services reading meant the Ireland composite output index remained below 50 in February at 42.7 points, up from 40.3 in January. On Monday, IHS Markit had said the AIB Ireland manufacturing PMI edged up to 52.0 points last month from 51.8 in January, both scores indicating growth.

"The impact of the continuing lockdown was very evident in a further decline in new business in the month, as tight restrictions suppressed demand, both domestically and in the UK in particular," said AIB Chief Economist Oliver Mangan. "This reduction in new business resulted in a further marked decline in the volume of outstanding work, and saw another round of job cutting in the sector."

He added: "Hope springs eternal, though, with expectations for the 12-month outlook rising sharply to the strongest level in over a year. Firms expect that the roll out of the vaccine programme will see lockdown restrictions gradually lifted, leading to a rebound in business activity as the year progresses, a clear ray of hope in an otherwise weak survey."

Survey responses were collected between February 11 and 23 from a panel of 400 service sector companies in Ireland.

By Tom Waite; thomaslwaite@alliancenews.com

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