According to the AIB Purchasing Managers’ Index (PMI) survey data for September 2022, last month, service sector activity in Ireland increased at the slowest rate in the current 19-month sequence of growth, while new business rose at the softest rate since March of last year. However, input price and charge inflation rates remained among the highest on record in September, and employment rose at a strong overall pace, though companies continued to report staff shortages.
AIB stated that the Services Business Activity Index fell for the fifth time in six months, to 54.1 in September from 54.7 in August.
Transport, Tourism And Leisure
According to AIB, activity in the transport, tourism and leisure (49.3) sector fell for the first time since December of last year. There was a drop in demand therein, while overseas demand was notably weak last month, weighed down by declines in the business services and transport, tourism and leisure sectors.
AIB also stated that a decline in export business was registered in the transport, tourism and leisure sector, and the sector posted a decline in staffing, as well as the weakest input price inflation increase rate for 15 months, and the slowest rate of charge inflation for a year.
Additionally, AIB stated that new business in the transport, tourism and leisure sector declined for the first time this year so far, while outstanding work rose only marginally and companies in the sector cut staffing for the first time since January. The 12-month outlook weakened to a 22-month low, however, more positively, input price and charge inflation slowed to 15- and 12-month lows, respectively.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, “The AIB Irish Services PMI for September showed that while activity continued to expand at a solid pace, the month registered the slowest rate of growth since February 2021. The Business Activity Index fell to 54.1, down from 54.7 in August and 56.3 in July. Activity in Ireland, though, is holding up much better than elsewhere. The Flash Services PMI readings were in contraction territory in the UK and Eurozone in September, at 49.2 and 48.9, respectively.
“The Irish survey covers four subsectors, and the data shows that the transport/tourism/leisure sector was much weaker than the other three in September. Its Business Activity Index fell sharply, to 49.3 from 54.8 in September. Indeed, there were marked falls across all the survey’s main components of new business, outstanding business, employment, and future activity in the transport/tourism/leisure sector.
“For services as a whole, growth in new business remained strong, most notably in technology/media/telecoms and business services, although new export business fell back to its weakest level since January. There was another significant increase in backlogs of outstanding business, which firms partly linked to staff shortages. In this regard, there was a further strong rise in employment, with the notable exception of transport/tourism/leisure. Meanwhile, firms’ outlook for the next 12 months weakened further, on concerns about rising inflation and the risk of a recession.
“Businesses continued to experience acute upward pressure on input costs, especially energy prices and wages. These continued to be passed on to customers in the form of higher price charges. The rate of increase in both input prices and prices charged remained very elevated in September, continuing to be amongst the highest on record.”
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