Growth in service sector picks up as restrictions lift
Growth in the country’s service sector picked up strongly in February, as the recovery from the pandemic gained momentum following the lifting of Covid-19 restrictions.
The AIB Services PMI rose sharply to 61.8 from 56.2 in January and 55.4 in December.
Readings above 50 indicate overall rises in activity.
The latest reading signalled the fastest increase in service sector output since last October.
The month-on-month acceleration in growth was the sharpest on record, according to the data.
Activity picked up in other countries too, but the Irish index was above the flash readings in the Eurozone, the UK, and the US.
“Most notable in the Irish survey was the sharp acceleration in the growth of new business, including exports, with improving economic conditions as the pandemic waned, boosting demand for services,” said Oliver Mangan, AIB Chief Economist.
This was evident across all four sub-sectors covered in the survey.
Financial and business services registered the strongest growth in business activity in February, the data reveals.
Business Services was a close second with growth at a five-month high.
Despite a further rise in employment, the surge in demand saw the volume of outstanding business in the services sector rise at it fastest pace since 2000.
This was also linked to staff shortages and supply difficulties.
“Firms in all sectors remained very optimistic on the 12-month outlook for business, with activity expected to gain further momentum as the pandemic recedes, in particular tourism,” said Mr Mangan.
The data shows that businesses continued to experience marked upward pressure on input prices last month, especially from higher labour and energy costs, but also fuel, insurance, shipping and UK customs.
The rate of input price inflation was the fastest in more than 21 years.
Meanwhile, the prices charged to customers also rose at the quickest pace since 2000.
The data shows that price pressures were most acute in the transport, tourism and leisure sector.