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Delay in government formation hits Irish services as new business slows

Political instability may have caused a slowdown in the Irish services industry in April as growth in new business hit a 26-month low.

According to the Investec Purchasing Managers’ Index (PMI) new business growth in the sector eased for the third month in a row, hitting its lowest since February 2014.

The headline reading from the PMI was 59.8 down from March’s 62.8 reading.

However, despite the slowdown employment has continued to grow in the services industry. The PMI said employers continued to increase their staff levels at a sharp pace with employment now registering its 44th consecutive month of growth.

Increased fuel and insurance costs as well as a jump in staffing costs caused an increase in overall input costs.

Investec chief economist Philip O’Sullivan said some panelists reported political instability, which led to delays in contracts being confirmed.

“We understand that this relates to a combination of the EU referendum in the UK and the drawn-out process around the formation of a new government in Ireland since the general election held on February 26th.

“With that being said, we note that just over three times as many panelists recorded an increase in new business during April compared with the numbers posting a decrease,” Mr O’Sullivan said.

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