According to the AIB Purchasing Managers' Index (PMI) survey data for May 2023, ongoing demand strength continued to support sustained Irish service sector growth last month.
AIB stated that the Services Business Activity Index was down last month to 57.0, from 58.4 in April, but but still above the 50.0 no-change threshold that separates growth from contraction.
Transport, Tourism And Leisure
According to AIB, the strongest growth last month was at firms within the transport, tourism and leisure industry, with a surge in improvement in demand conditions being in contrast to softer expansions seen
elsewhere.
AIB also stated that the transport, tourism and leisure ndustry topped the growth rankings for the first time in a year last month, with activity and new business growth rates picking up to 12- and 11-month highs, respectively, and the new export orders increase accelerated to a robust pace, while input price and output charge inflation rates both softened on the month.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, "The AIB Irish Services PMI for May posted another very strong reading of 57.0, down slightly from 58.4 in April, an 11-month high. It points to a continuing robust rate of growth in business activity in the services sector. The Irish figure was above the flash May Services PMI readings of 55.9 for the Eurozone and 55.1 in both the UK and US economies.
"There was yet another steep increase in new business volumes in Irish services firms, including new export business, reflecting strong demand conditions, both at home and abroad. Employment posted a further solid rise, though firms reported difficulties in sourcing staff. Pressure on staffing levels and continuing strong growth in new business resulted in a further marked rise in backlogs of work. Meanwhile, firms have become more optimistic on the outlook for the next 12 months, with confidence rising to its second highest level since February 2022.
"May was notable for a sharp increase in activity and strong growth in new business, including from abroad, in all of the four sub-sectors covered in the survey. In particular, there was a very marked pick-up in the transport/tourism/leisure sector, helped by a surge in visitor numbers from overseas.
"With the continuing strong growth in activity, inflationary pressures remained elevated in May, but they are easing. Businesses again reported significant upward pressure on input costs, in particular wages. The rate of increase in cost inflation, though, did fall to its lowest level in over two years. Increases in costs continue to be passed on in higher prices to customers, but here again, selling price inflation dipped to a near two-year low."
Read More: Service Sector Activity Increased In April, According To Latest AIB PMI Survey Data
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