Prices charged by service providers rose at the slowest rate in over three-and-a-half years in November despite a sharp rise in activity in the sector, data from AIB’s purchasing managers’ index shows.
Demand improved, inflationary pressures receded and employment rose at a faster pace, though still weaker than the long-run survey average as the 12-month outlook was slightly less optimistic.
The seasonally adjusted overall figure rose sharply to 58.3 in November from 53.8 in October. A reading above 50 indicates growth. The latest reading indicated the fastest rate of growth in services activity since April 2023. The 4.5 point advance last month was the largest observed since February 2022.
All four sub-sectors posted faster growth in November. Financial services (60.1) was the best-performing area, followed by technology, media and telecoms (59.3) and business services (56.7).
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Transport, tourism and leisure, at 56.4, posted the slowest, but still strong, rate of expansion in business activity. The figure was its strongest for a year-and-a-half.
November data signalled an improvement in demand, as the volume of new work received by service providers increased at the fastest rate since March. Demand was strongest in financial services, as well as transport, tourism and leisure.
New business from international clients rose at the fastest rate in eight months, with a notable improvement in transport, tourism and leisure.
Cost pressures remained strong overall, with the seasonally adjusted input prices index remaining well above the no-change mark of 50.
That said, input cost inflation has stabilised at around its lowest level for nearly four years. That led service providers to raise charges more slowly in November – the weakest since April 2021, albeit still above the long-run average.
[ Irish services activity grows in September as business costs decline — PMIOpens in new window ]
The faster expansion in new orders contributed to an improvement in job creation after October had witnessed one of the slowest rates of employment growth for over three years. That said, job creation remains below the 2024 average and the long-run survey trend.
By subsector, the strongest pace of hiring was seen in technology, media and telecoms. At the other end of the scale, financial services posted only a slight increase in workforce numbers.
With employment growth remaining softer than the long-run average, the volume of outstanding business held at service providers continued to rise. However, the increase was the weakest in the current 10-month sequence of expansion, partly reflecting a decline in business services.
Service providers remained optimistic, on balance, of growth over the next 12 months. Around four in 10 companies expected an increase in business activity, while only 8 per cent predicted a decline.
Confidence, however, remains about as weak as it has been over the past two years and below the long-run survey average.
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