According to the AIB Purchasing Managers' Index (PMI) survey data for January of 2023, Ireland's service sector started 2023 in a relatively positive fashion.
AIB said that expansions in activity and new business were the fastest in four and three months, respectively, and were accompanied by a further increase in staffing numbers, with other positive news coming from a sustained easing in cost pressure with input price and output charge inflation rates easing to 19- and 16-month lows, respectively, and overall business sentiment also brightened as firms were hopeful that the current
market trajectory would continue.
AIB stated that the Services Business Activity Index was up last month to 54.1 from 52.7 at the end of 2022, and that growth was solid overall and the strongest since September of 2022.
Transport, Tourism And Leisure
According to AIB, by sector, growth in three of the four monitored industries offset a contraction in transport, tourism and leisure, with that sector bucking the wider trend of growth in new business, but growth in outstanding orders was registered in all four sectors.
AIB also stated that firms in the transport, tourism and leisure sector registered a fifth successive month of
declining activity, with the rate of reduction being steep and the sharpest in close to two years, and new business fell for the third time in as many months, albeit marginally.
Additionally, AIB stated that on a more positive note, employment levels grew solidly, sentiment strengthened to an 11-month high, and, that in terms of prices, cost burdens increased at an accelerated pace while the output price inflation rate eased to a 20-month low.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, "The AIB Irish Services PMI for January showed faster
growth in activity for the sector in a strong start to 2023. The Business Activity Index rose for the second
month running, climbing to 54.1 from 52.7 in December and 50.8 in November. By contrast, the flash Services
PMIs for the UK and US remained well into contraction territory in January at 48.0 and 46.6, respectively, with the index for the Eurozone standing at a subdued 50.7.
"There was a marked pick up in new business volumes here in January, including in new export business, reflecting an improvement in demand. This resulted in a significant increase in backlogs of outstanding business, with signs of growing capacity constraints. There was a further rise in employment, but at a modest pace, amid indications of tightness in the labour market. Meanwhile, firms’ confidence about the outlook for the next 12 months rose to its highest level since last February.
"As has been the case for the past six months, the Services PMI in January continued to be weighed down by a very weak performance in the transport/tourism/leisure sector. It registered a very low reading of 40.1 for business activity. By contrast, the other three sectors covered in the survey expanded strongly in the month.
"Meanwhile, inflationary pressures in the services sector, while still strong, eased further in January. Businesses continued to report upward pressure on wages and energy costs, but the rate of increase in input prices fell to a 19-month low. Higher costs are still being passed on to customers, but the rate of increase in selling prices eased to its lowest level in 16 months." "
Read More: Service Sector Activity Increased In December, According To Latest AIB PMI Survey Data
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