Services sector records strongest quarter since early 2006

The services sector continued to expand last month with September completing the strongest quarter since early 2006.

The latest AIB Services Purchasing Managers' Index (PMI) shows business activity index was unchanged from August at 63.7, the second-highest reading since January 2016, and the third-highest reading since the series began in 2000. The index has been comfortably above 60 for five consecutive months. A figure above 50 signals an expansion in output.

New and outstanding work both continued to expand sharply while jobs were added at a robust pace.

AIB chief economist Oliver Mangan said continued strong business activity highlights the very sharp rebound seen in services activity as pent-up demand is released amid the ongoing easing of Covid-related restrictions.

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“The continuing very high Irish PMI readings contrasts with the easing trend seen in other European countries. The flash Services PMIs fell to 56.3 in the eurozone and 54.6 in the UK in September. This may reflect that restrictions started to be eased here at a later stage,” he said.

The strong growth in business activity was evident across all four sub-sectors of the services survey. Financial services registered the fastest increase, the strongest in nearly seven years.

The services sector posted another strong rise in employment for a seventh consecutive month. Companies remain strongly confident of growth over the coming 12 months with sentiment regarding expected business activity continuing to score above the long-run survey average.

However, cost pressures at service providers also continued to build in September. Input price inflation accelerated for the seventh time in eight months to the highest since December 2000. Rising cost continued to be passed on to customers with charges rising at one of the strongest rates in the survey history, albeit one that eased since August.