Services sector begins to rebound amid partial lifting of restrictions
AIB barometer suggests new business and total activity rose at fastest rates since before crisis
AIB’s report said ‘total workloads’ were boosted by a much sharper rise in new business in April. Photograph: Paul McErlane/Reuters
Activity in the Irish services sector in April rose at its strongest rate since the pandemic began, a sign that the bounce back from months of lockdown may already be under way.
AIB’s latest purchasing managers’ index (PMI) for the services sector here, which accounts for about 70 per cent of the economy, suggested both total activity and new business increased at the fastest rates since February 2020. The outlook for the sector also improved, with sentiment the strongest in three years.
As a result, AIB’s headline index rose to 57.7 in April, up from 54.6 the previous month. A score above 50 denotes expansion.
The latest findings coincide with the partial lifting of pandemic-related restrictions in April.
The services sector covers a range of industries – everything from hotels and hairdressers to IT firms and telecoms. While many are still blocked from trading normally because of measures to curb the pandemic, others are open.
All four subsectors in AIB’s report registered higher activity in April, the bank said, noting this was “the first broad-based expansion” since prior to the pandemic. The strongest growth was in technology, media and telecoms (TMT), followed by business services, financial services and transport, tourism and leisure respectively.
AIB’s report said “total workloads” were boosted by a much sharper rise in new business in April.
It also noted that international demand supported inflows of new work, as exports of services rose at the joint-fastest rate since July 2018, with demand notably strong in the financial services subsector. Firms reported increased business from the UK and mainland European markets, it said.
“In particular, there was a further pick-up in new business in the month, including new export business, with firms reporting increased market activity as restrictions start to be eased,” he said.
“The pick-up in new business resulted in a marked rise in the volume of outstanding work, with widespread increases in order backlogs. Meanwhile, employment expanded strongly for the second month running, having being in decline for most of the past year,” he added.