The services sector posted strong but slower growth in April, according to a new survey, but prices rose at the fastest rate on record as inflation continued to put pressure on the sector.
The AIB Purchasing Managers Index posted the fastest rise in expenses in more than 20 years. It was also the second fastest rate of input price increases on record.
The sector’s growth rate also slowed as concerns over the war in Ukraine and the continued spike in the cost of living weighed on confidence.
The services business activity index, an aggregate figure calculated on the basis of month-on-month changes in the volume of business activity, fell from the five-month high recorded in March at 61 .7 last month. A figure above 50 indicates expansion in the sector.
The sector has been expanding every month since March 2021 and has maintained levels above the long-term trend level of 55.1 since April last year.
Employment on the rise
Employment grew at a healthy pace during the month, and activity and new business increased further.
The index also revealed momentum in the transport, tourism and leisure sector as its recovery continued. The sector saw the fastest overall expansion, with an index at 69.2, after a near record in March, while financial services and technology, media and telecommunications also posted strong readings of higher of 60. Business services posted the slowest growth at 56.2.
Although the growth rate moderated from February and March, it remained well above the long-term survey average as the continued easing of pandemic-related restrictions fueled growth. International demand for Irish services was also stronger, driven by UK consumers and businesses.
“The rebound in demand is putting increasing pressure on operating capacities, with a further significant increase in outstandings over the month. Some companies have reported a lack of resources to cope with the sharp upturn in demand. The future activity index, however, remained below its long-term average as lingering concerns over the war in Ukraine and high inflation undermined confidence in the 12-month outlook for activity,” said Oliver Mangan, AIB Chief Economist.
“In this regard, businesses have continued to face strong upward pressure on input prices, particularly due to rising wages, energy, fuel, insurance, transport and food costs. . The rate of input price inflation was the second fastest in the survey’s 21-year history. Meanwhile, prices charged by service providers rose at a record pace for the second month in a row, as higher costs were passed on to customers. »