According to the AIB Purchasing Managers’ Index (PMI) survey data for April 2022, there was further strong growth in Irish services activity last month, but there was a record increase in prices charged, as firms dealt with rising costs and inflation concerns and the war in Ukraine continued to undermine the 12-month outlook, which picked up only slightly since plunging in March, following the invasion. More positively, however, strong recovery continued in the transport, tourism and leisure sector.
AIB stated that the Services Business Activity Index eased from March’s five-month high of 63.4 to 61.7 in April, signalling another rapid increase in Irish service sector output. Growth has been maintained every month since March of last year, and has registered above the long-run survey trend level (an index reading of 55.1) since April of last year, according to AIB, which also stated that April’s month-on-month easing in the pace of growth was the first that has been registered this year to date.
Transport, Tourism And Leisure
According to AIB, the fastest overall expansion was in the transport, tourism and leisure sector (69.2), in which growth eased from March’s near-record pace, but remained among the fastest registered since the survey started in 2000. Inflows of new business at Irish service providers was strongest in the transport, tourism and leisure sector, as consumer-facing sectors continued to fully reopen following pandemic-related restrictions.
New-business growth in the transport, tourism and leisure sector reached a nine-month high, with a near-record increase in international demand. The same sector also registered the fastest increases in outstanding business, employment, input prices and charges among the four monitored sectors, according to AIB.
Increased Employment Rate
Additionally, AIB stated that service providers continued to increase their staffing in April, which was linked to rising workloads and efforts to replace previous leavers. While the rate of job creation eased for the first time in four months, it was nevertheless among the fastest seen over the past three years, and well above the long-run survey average.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, “The AIB Irish Services PMI showed continuing very strong growth in the sector in April. The Business Activity Index eased from March’s five-month high of 63.4 to 61.7. It was the third consecutive month that the index has been above 60, as the recovery in services activity continued to gain momentum following the lifting of Covid restrictions earlier in the year.
“There was another sharp rise in new business, including exports, as demand continued to strengthen, with employment growth remaining firm. Strong growth in activity was evident once more in all the four subsectors covered in the survey. Most notably, growth was again strongest in transport, tourism and leisure. Indeed, it registered the fastest growth of all four sectors for total activity, new business, exports, outstanding business and employment.
“The rebound in demand is putting growing pressure on operating capacity, with another significant rise in outstanding business in the month. Some firms reported a lack of resources to cope with the marked pickup in demand. The Future Activity Index, though, remained below its long-run average, as ongoing concerns around the war in Ukraine and high inflation dampened confidence about the 12-month outlook for activity.
“In this regard, businesses continued to experience severe upward pressure on input prices – in particular, from higher wages, energy, fuel, insurance, shipping and food costs. The rate of input price inflation was the second fastest in the 21-year history of the survey. Meantime, the prices charged by service providers rose at a record pace for the second month in a row, as higher costs were passed through to customers.”
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