Services activity increases at fastest rate for three-and-a-half years
Business activity in the services sector rose at its fastest rate for three-and-a-half years in November, the latest AIB Ireland services PMI has found.
The upturn was broad-based and driven by a renewed expansion in the transport, tourism and leisure sub-sector.
New business growth also accelerated and there was a solid increase in employment, improving the 12-month outlook.
However, input price inflation remained relatively high, and charges were increased at the fastest rate in 10 months.
The seasonally adjusted AIB Ireland services business activity index rose for the third month running, posting a reading of 58.5 in November, up from 56.7 in October.
The increase in output was the steepest since May 2022 and well above the long-run survey average since 2000 of 55.0. Any reading above 50.0 indicates an expansion.
Financial services (60.9) recorded the sharpest increase in activity of the four broad sectors, closely followed by technology, media & telecoms (60.3) and business services (57.7).
Transport, tourism & leisure expanded for the first time since February, posting a reading of 53.3.
"The AIB Irish Services PMI for November shows a sharp acceleration in growth in the sector, with the index rising to 58.5 from 56.7 in October," said David McNamara, chief economist at AIB.
"This marks the fastest pace of growth since May 2022, driven by strong gains in current activity and new business.
"Overall, the rate of growth in the Irish services sector continues to outperform the Eurozone, UK and US flash PMIs at 53.1, 50.5 and 55.0, respectively."
New business growth accelerated for the fourth successive month and was the strongest since April 2022. All four categories posted sharp increases in new business, led by financial services.
New export orders rose at a solid pace that was broadly in line with those posted in September and October.
The surge in new business led to a steeper rise in outstanding work, and the rate of growth in incomplete contracts was the strongest since April.
The rate of job creation was the fastest since March and back above the long-term survey average, rising due to customer demand and proactive recruitment in anticipation of company expansions.
Cost pressures remained relatively strong in November, although the rate of input price inflation eased to a three-month low.
Higher wages, increased service and energy costs, insurance rates and pension costs drove input price rises for businesses.
Transport, tourism & leisure posted the fastest increase in input prices of the four monitored sectors, and financial services the weakest.
"Higher wages and energy costs, amongst others, continued to put pressure on costs. The prices charged index was also higher, and well above the long-term survey average, as firms continued to pass on higher costs to customers," said McNamara.
Services activity increased at the fastest rate since May 2022 in November.
"Looking ahead, firms in the Irish services sector were more optimistic on the prospects for expansion in activity levels over the coming 12 months.
"Confidence recovered from October’s four-month low, reaching the highest level since February, led by robust sentiment in financial services and [technology, media and telecoms]."
(Pic: Getty Images)
