Ireland's services sector grew at its slowest pace in almost six years in January, a survey showed on Tuesday, the second in days to suggest Brexit and a weaker global outlook are starting to curtail years of rapid business expansion.
Ireland brushed aside the initial uncertainty from Britain's 2016 vote to leave the European Union, posting the fastest economic growth in Europe for five straight years. But a corresponding Purchasing Managers' Index (PMI) survey for manufacturers last week put growth at a more than two year-low.
The AIB services PMI slipped to 54.2 from 56.3 in December, well above the 50 mark that separates growth from contraction. The services PMI has held above 50 since 2012, but January's reading is the lowest since May 2013, when Ireland was in an international bailout.
"The decline in business activity to its lowest level since May 2013 will likely capture most of the headlines. However, the index reading of 54.2 in January still represents a strong pace of expansion," AIB Chief Economist Oliver Mangan said, pointing to an earlier 50.8 flash reading for the euro zone as a whole.
"The decline in the other components of the PMI survey, though, was much less pronounced, most notably new export business and employment. Indeed, quite encouragingly, business expectations in the survey rose to a three-month high."
While business expectations rose to 68.6 from 68.2 a month earlier, the sub-index has remained below 70 for five of the last six months, after previously having done so only five times in five years.
"Overall, the survey signals a somewhat slower start to 2019 for the economy. It suggests growth is likely to slow this year, which is hardly surprising given the loss of momentum in the global economy in recent times," Mangan said. (Reuters)