Irish services industry PMI plunges to historic low of 13.9

(C) Reuters.

DUBLIN (Reuters) – Activity in Ireland’s services sector collapsed to a historic low in April, with a survey showing activity at less than half the previous lowest mark, seen during the global financial crisis that hit Ireland particularly hard a decade ago.

The AIB IHS Markit Purchasing Managers’ Index (PMI) forservices fell to 13.9 from 32.5 in March, far below the 50 markthat separates growth from contraction and broadly in line with a flash reading for the euro zone as a whole.

The March reading was already the third-weakest in the survey’s 20-year history after a gradual shut down of the economy to slow the spread of the coronavirus from mid-March. The previous record low of 31.8 occurred in February 2009.

All four sub-sectors registered unprecedented contractions in activity in April with two categories — transport, tourism & leisure and business services — recording single-digit index readings of 5.2 and 7.4 respectively, the survey’s authors said.

With unemployment forecast to hit 25%, Ireland laid out a roadmap on Friday for a steady reopening of the economy that could allow building sites and some retailers to open in two weeks, with restaurants following in June, hotels in July and finally pubs in August.

The services collapse follows a similar record decline for Irish manufacturing. Ireland’s finance ministry forecasts a decline of at least 10% in gross domestic product this year.

“The extent of the weakness in April is truly remarkable: 78% of firms reported lower business activity; 80% recorded declines in new orders; over 40% of companies cut staff numbers, while almost 60% saw a decline in order backlogs,” AIB Chief Economist Oliver Mangan said.

“One glimmer of hope was that business sentiment may be stabilising, with the index for the outlook for the next 12 months falling only slightly after its big plunge in March.”