According to AIB, the AIB Purchasing Managers' Index (PMI) survey data for May of 2022 pointed to further sharp increases in business activity and new orders in the Irish service sector as the recovery from the COVID-19 pandemic continued, with the transport, tourism and leisure sector leading growth of activity, new business and employment.
AIB stated that the Services Business Activity Index posted 60.2 in May, which was down from 61.7 in April but still pointed to a sharp monthly increase in output across the service sector, and Activity has now increased in each of the past 15 months, however the latest expansion was the softest since January of this year.
Transport, Tourism And Leisure
According to AIB, the transport, tourism and leisure category continued to record the fastest increase in activity, with growth quickening to a near-record pace, and transport, tourism and leisure posted the fastest increases in both total new business and new export orders.
The rate of job creation accelerated to the fastest since July of last, with marked increases in employment being recorded across each of the sectors covered by the survey, and the sharpest increasing being in transport, tourism and leisure, according to AIB, which also noted that inflation was most pronounced in the transport, tourism and leisure sector.
Additionally, AIB stated that the transport, tourism and leisure category again posted the sharpest increase in activity of the monitored sectors by far, with output growth being among the sharpest in the series history, and the sector also led the expansions in new business, exports and employment, however inflationary pressures were also more pronounced than elsewhere, despite the pace of increase in input costs easing from April's record.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, "The AIB Irish Services PMI shows continuing very strong growth in the sector in May. The Business Activity Index stood at 60.2, down slightly from 61.7 in April. It was the fourth consecutive month that the index has been above 60, signalling an ongoing strong recovery in services activity following the lifting of COVID restrictions back in January. Moreover, the Irish index is well above the flash May Services PMIs for the Eurozone and UK of 56.3 and 51.8, respectively, with the latter falling sharply last month.
"There was another marked rise in new business for Irish services firms, including exports, as they continued to benefit from the release of pent-up demand. Meantime, employment growth accelerated to its fastest rate since last July. In terms of the four sub-sectors covered in the survey, business services recorded the slowest growth, while the strongest expansion was once again in transport/tourism/leisure. Indeed, this sector continued to see the fastest growth in total activity, new business, exports, outstanding business and employment.
"The rebound in demand continues to put pressure on operating capacity, with another significant rise in backlogs of outstanding work in all four sub-sectors. The Future Activity Index, though, remained below its long-run average, as has been the case since the Russian invasion of Ukraine and resulting increased uncertainty about the economic outlook.
"Meanwhile, businesses continued to experience severe upward pressure on input prices, in particular, fuel and wage costs. This in turn is leading to higher prices being charged to customers. Indeed, the rate of growth in both input price inflation and prices charged was the second fastest in the 22-year history of the survey."
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