Activity in the services sector expanded sharply through May and at the fastest pace since November 2018, according to the AIB Services PMI.

The rate of expansion of new orders quickened to a five-month high, amid improving economic conditions and more successful marketing efforts.  Service providers recorded a sharper workforce expansion and sentiment with regard to activity over the coming year improved as expectations of stronger economic conditions boosted confidence. 

The seasonally adjusted Business Activity Index posted 57.0 in May, up from 54.7 in April. “Moreover, the rate of growth was marked and faster than the long-run series average,” says the report, which is produced by IHS Markit on the basis. of interviews with 400 services companies 

At the sectoral level, business services companies recorded the fastest rise in activity in May, while transport and leisure showed a decline.

AIB economist Oliver Mangan (pictured) commented: “New order growth was very strong, and panellists reported rising order demand from both at home and abroad. As a result, volumes of unfinished orders rose at their fastest rate since July 2018 as backlogs increased amid growing capacity constraints. Employment growth in services remained solid. 

In Association with

"In terms of the four sectors covered in the survey, firms in business services, technology/media/telecoms and financial services registered robust growth in activity, with sharply rising new orders. The one disappointment was that the transport/tourism/leisure sector posted its first decline in activity since May 2018.”

Anecdotal evidence from panellists attributed the rise in staffing to greater levels of activity and new business. Companies operating in the TMT sector posted the strongest expansion in staffing levels. 

The rate of input price inflation rose to a three-month high, driven by fuel and staff costs. Output charges also rose in May, with the rate of inflation the fastest in three months. 

Predictions of higher new orders and business investment supported optimism that activity will continue to rise over the coming year. Sentiment picked up in May and was the sharpest since January. Around 41% of panellists predicted a rise in output over the next 12 months.