Pace of growth in service sector accelerates in May

June 7, 2024

The pace of growth in the service sector accelerated in May, new data shows.

The latest AIB Purchasing Managers’ Index (PMI) reveals that the index increased from 53.3 in April, to 55 last month.

Readings above 50 indicate overall growth in activity.

The pace of expansion was the strongest reading since March and broadly in line with the long-run series average since 2000 of 55.1.

Today’s report shows that new business growth accelerated in May.

There were reports of additional work from existing customers and successful marketing efforts winning new clients.

Meanwhile, new export business growth eased to a three-month low, despite a sharper rise in Transport, Tourism & Leisure.

“Overall, Irish firms continued to report rising levels of new business, and this was linked to solid domestic and international demand, particularly from Europe and the UK,” said David McNamara, AIB Chief Economist.

“The volume of outstanding work also rose again on the month, but performance varied across sectors,” he added.

For the fourth month in a row, all four sub-sectors registered higher activity.

Technology, Media and Telecoms was the strongest-growing segment, having previously been the bottom-ranked sector during March and April.

Financial Services ranked second, following a five-month period as the fastest-growing sector.

Business Services posted a relatively modest increase in activity, while growth nearly stalled in Transport, Tourism & Leisure.

Today’s data shows that employment continued to rise in the services sector overall and the pace of hiring growth picked up compared to April.

However, there was a slight decline in hiring in the Transport, Tourism & Leisure.

Companies in the Irish services sector remained confident of higher business activity over the next 12 months.

Overall sentiment picked up to a three-month high and was particularly strong in Technology, Media & Telecoms and Financial Services.

Optimism was linked to improving consumer demand, tourism, new services, falling inflation and the prospect of lower interest rates.

However, cost pressures at services firms remained strong in May and picked up since April.

“Input cost inflation remained at a high rate in May, with the pace of increase accelerating compared to April,” said Mr McNamara.

“Wages and fuel were again cited as the main sources of higher costs by respondents.

“Firms also continued to raise prices for customers, but the output price index decelerated somewhat on the month to a five-month low,” he added.

Article Source – Pace of growth in service sector accelerates in May – RTE

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