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Ireland's private sector remained in expansion territory last month, but the increase in business output was the weakest since January, as demand was hurt by high cost inflation, survey results from S&P Global showed Friday.
The AIB services purchasing managers' index dropped to 60.2 points in May from 61.7 points in April. The May score was the lowest since January, but still represented a robust level of business activity.
Three out of four services sub-sectors in Ireland reported slower growth for May, however Transport, Tourism & Leisure recorded its fastest increase in activity, quickening to a record pace in new business and export orders.
Employment levels increased in May for the 15th consecutive month, and at the fastest rate since July 2021 as the backlog of work continued to accumulate, through the rise in new business.
Less positively, the survey recorded severe cost pressures, with the input price inflation rate barely missing the record pace observed in March, as firms noted a rise in fuel and wage costs. Companies themselves raised their own selling prices rapidly, marking the second steepest rate of growth on record, behind April.
Looking ahead, Irish services firms continue to expect further growth in activity over the coming year on further recovery from the pandemic and rising new business, but confidence remained way below the level seen prior to the war in Ukraine.
The services survey is sent to a panel of 400 firms with responses collected between May 12 and 26.
The headline AIB Ireland manufacturing PMI declined to 56.4 points in May from 59.1 in April, figures had shown on Wednesday.
As a result, the composite PMI was at 57.5 points in May, down from 59.6 in April but still firmly in expansion territory.
‘It was the fourth consecutive month that the [services] index has been above 60, signalling an ongoing strong recovery in services activity following the lifting of Covid restrictions back in January,’ said AIB Chief Economist Oliver Mangan.
‘The rebound in demand continues to put pressure on operating capacity, with another significant rise in backlogs of outstanding work in all four sub-sectors. The Future Activity Index, though, remained below its long-run average, as has been the case since the Russian invasion of Ukraine and resulting increased uncertainty about the economic outlook.’
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