Business

Service sector growth gains momentum in March

Total activity and new business rose at the fastest rates since July 2023

Service sector companies continued to raise prices for customers in March, but output inflation slowed compared to February. Photograph: iStock

Laura Slattery
Thu Apr 4 2024 - 06:00

Irish service sector growth accelerated further in March following a rebound in February, according to the latest purchasing managers’ survey from AIB.

Total activity and new business both rose at the fastest rates since last July, resulting in another solid round of employment growth.

Inflationary pressures eased, but both input price and charge inflation remained above their respective long-run trends. The 12-month outlook for activity slowed from February’s recent high, however, and was below the long-run survey average.

“The acceleration in activity was broad-based and points to improving business conditions throughout the first quarter of 2024,” said AIB chief economist David McNamara.

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“Irish firms continued to report rising levels of new business across all sectors, and this was linked, in part, to robust international demand. The volume of outstanding work also increased on the month, as earlier new orders growth now translates into activity. At the sectoral level all four covered in the survey registered accelerating growth, which was led by robust growth in financial services again in March,” he said.

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Several other sectors registered strong rates of growth, buoyed by rising new orders.

“Employment continued to rise, but the pace of job creation decelerated on the month, with hiring growth easing in three of the four sub-sectors, particularly in the technology, media & telecoms and the transport, tourism & leisure sectors,” said Mr McNamara.

On the input side, the rate of inflation eased for the first time in four months but was still the second-fastest rate since June 2023. Wages, utilities, and fuel were all cited as being more expensive, however.

Firms continued to raise prices for customers, but output inflation also slowed on the month.

“Business sentiment about the prospects for activity over the coming twelve months also moderated. Nonetheless, confidence was supported by new products and services and expected imminent interest rate cuts by central banks,” he said.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics

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