According to the AIB Purchasing Managers' Index (PMI) survey data for March of 2023, Ireland's service sector experienced a slight softening in its recent upturn last month, amid moderations in rates of increase in activity and new business.
AIB stated that the Services Business Activity Index was down last month to 55.7 from 58.2 in February.
Transport, Tourism And Leisure
According to AIB, granular data highlighted that transport, tourism and leisure firms joined their sector counterparts in expansion territory with regards to output during March, which marked the first time since August of 2022 that all four of the monitored industries registered growth.
AIB also stated that a fresh and strong expansion was also registered in the transport, tourism and leisure sector with regard to new order intakes, but that the level of sentiment fell notably from February.
Additionally, AIB stated that, concurrently, there was some improvement on the price front, with rates of input price and output charge inflation dipping to 26- and 23-month lows, respectively.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, "The AIB Irish Services PMI posted a strong reading of 55.7 for business activity in March, though this was down somewhat from February’s nine-month high of 58.2. It points to a continuing strong rate of growth in services activity. The Irish figure was closely in line with the flash March Services PMI for the Eurozone of 55.6, but above the readings for the UK and US of 52.8 and 53.8, respectively.
"Another sharp rise in new business volumes in Irish services firms was recorded in March, in particular new export business, reflecting strong underlying demand conditions, both at home and abroad. This resulted in a further marked increase in backlogs of work. There was another solid rise in employment, but there were reports of difficulties in sourcing and retaining staff. Meanwhile, firms remained upbeat about the outlook for the next 12 months. However, the level of confidence slipped to a three month low amid some concerns about future demand.
"March saw a strong expansion in activity and good growth in new business, especially from abroad, for the four sectors covered in the survey. Most notably, the transport/tourism/leisure sector returned to expansion territory for the first time since August, helped in particular by a strong rise in new business.
"While the pace of price increases eased in March, inflationary pressures remained elevated throughout the services sector. Businesses continued to report upward pressure on prices across a broad range of inputs, in particular wages and energy bills. Higher costs continue to be passed on in higher prices to customers, with the rate of increase in selling prices still steep, despite falling an 18-month low."
Read More: Pubs And Restaurants Led February Spending Increases, Says AIB
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