Irish Services Activity Continues to Fall Amid Marginal Reduction in New Business

Kimberly Watson, Editor in Chief
August 07, 2012 /

The seasonally adjusted Business Activity Index fell to 49.1 in July, down from 49.7 in June to signal a third successive fall in activity in Ireland.

Although the pace of reduction quickened over the month, it was still only marginal. Respondents indicated that new business was insufficient to compensate for the completion of projects.

Companies expect activity to increase over the coming year amid improving economic conditions as well as new products and marketing strategies. The level of positive sentiment was slightly stronger than seen in June, but weaker than the series average.

Overall new orders decreased for the second time in the past three months amid fragile client confidence. That said, the decline was only marginal. In contrast to the trend seen for overall new business, new export orders increased again in July.

Moreover, the twelfth successive rise was marked, and the fastest since February 2011. Respondents suggested that non-Eurozone markets had been the main source of growth, with the UK and Australia mentioned.

With new business falling, companies used spare resources to work through outstanding business in July. Moreover, backlogs of work decreased at a solid, and accelerated pace.

Irish service providers reduced their output prices for the third successive month in July, and the pace of reduction quickened from June. Reports suggested that in some cases cost considerations had influenced decisions on employment.

Although input prices continued to increase in July, the rate of inflation remained relatively modest. Where input costs rose, higher fuel and energy prices as well as increased salary payments were mentioned.

Despite rising input prices, companies continued to lower their prices charged amid strong competitive pressures. The rate of decline in output prices remained marked. Charges have decreased in each month since August 2008.

 

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