Ireland Service Sector Activity Deteriorates In September

Ireland's service sector contracted in September amid rising virus cases and economic uncertainty, survey data from IHS Markit showed on Monday.

The AIB Ireland services Purchasing Managers' Index fell to 45.8 in September from 52.4 in August. Any score below 50 indicates contraction in the sector.

Over the third quarter, the index rose to 50.0 compared to 25.7 in the second quarter.

Transport, tourism and leisure declined at a faster rate in September. Financial intermediation dropped for the sixth time in seven months, while business services and the technology, media and telecoms sectors fell marginally.

Total activity declined with the fall in incoming new business in September. Export demand weakened due to Covid-19 uncertainty and Brexit and the rate of decline in new exports was the fastest on three months.

Backlogs of work declined for the seventh month in a row in September and the rate of depletion was the weakest in the current sequence. The rate of job shedding fell slightly from August.

Input prices rose for the third straight month in September and prices charged increased for the first time in seven months.

The 12-month outlook remained positive in September, though it eased from its recent high in June.

Private sector output, covering manufacturing and services, decreased in September. The composite output index fell to 46.9 in September from 54.0 in the previous month.

"The recent marked rise in new cases of Covid-19 in Europe and resulting re-imposition of restrictions on activity is being most clearly felt in services sectors that depend on discretionary consumer spending," Oliver Mangan, AIB chief economist, said.