Growth of activity picks up but outlook remains subdued
The pace of growth in the country’s services sector picked up in May, according to the latest purchasing managers index from AIB.
The seasonally adjusted index rose from 52.8 in April to 54.7 last month – with any figure above 50 representing growth.
But export growth was more subdued, while optimism around activity in the coming 12 months only picked up slightly.
The survey data for May indicated a partial recovery in the services economy, but the outlook remained below par as concerns over international trade tensions lingered.
Total activity and new business increased at faster rates than April, although growth in outstanding business and employment both eased.
The 12-month outlook improved only slightly from April’s post-pandemic low, reflecting ongoing business uncertainty.
Cost pressures eased to an eight-month low, but charge inflation picked up and remained well above the long-run trend.
Commenting on the survey results, David McNamara, AIB Chief Economist, said:
“The AIB Irish Services PMI for May indicated an acceleration in growth in the sector, with the index rising to 54.7 from 52.8 in April. The uptick was driven by stronger new business growth and a recovery in output expectations, albeit outstanding business and employment growth both eased. Overall, the rate of growth in the Irish services sector outperformed the Eurozone, UK and US flash PMIs for May, at 48.9, 50.2, and 52.3, respectively.
“Both new business and export business increased during the month, although export growth was more subdued. From a sectoral perspective, three of the four sub-sectors expanded in May. Transport, Tourism & Leisure was the only sub-sector to see contraction compared to April. Technology, Media & Telecoms (TMT) remained the best performing of the four sub-sectors.
“Overall, jobs growth eased on the month, with Transport, Tourism & Leisure posting a decline in employment for the first time since August 2024, and Financial Services registering only a slight increase.
“On the inflation front, input cost pressures eased further to the slowest rate since last September, but prices charged picked up and remain well above the long-term average. Meanwhile, firms in the Irish services sector remained optimistic on the prospects for expansion in activity levels over the coming 12 months. However, the strength of sentiment improved only marginally from the post-pandemic low reached last month. Firms cited the ongoing uncertainty in relation to international trade relations.”
Article Source – Growth of activity picks up but outlook remains subdued – AIB PMI – RTE