Growth in the services sector fell back slightly in March as Brexit weighed on exports and confidence among firms fell to its lowest level in more than six-and-a-half years, according to a survey by AIB.

The AIB services Purchasing Managers’ Index (PMI) stood at 55.3 in March, down from 55.9 in February. 

New export business growth declined at an even sharper rate to 50.8%, the weakest since November 2016. This was the only time since 2011 that the sub-index dipped below the 50 mark that separates growth from contraction.

The data suggests that the economy is continuing to expand at an impressive pace. However, "readings for the opening three months of the year are all below the levels seen in 2018,” AIB chief economist Oliver Mangan said.

"This indicates that growth in the economy has slowed somewhat from the very robust rate seen in recent years.”

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The technology, telecoms and media sector showed the fastest rise in activity of the four monitored categories, largely down to an increase in new orders, even if slightly weaker than in February.

Mangan said: “Irish service providers continued to experience strong growth in new business in March, although new export orders expanded at their weakest rate in 28 months, possibly reflecting the impact of slower global growth this year.

Brexit uncertainty was weighing on sentiment, he added, as business confidence declined to its lowest level in more than 6½ years. “Nonetheless, volumes of unfilled orders rose further, while employment continued to expand at a strong pace,” he added.

On the price front, the rate of input cost inflation moderated in March to a four-month low, with higher transport, fuel and staff costs mentioned by panellists. The rate of output charge inflation also softened and was at a 10-month low. 

Mangan concluded: "Of the four sectors covered in the survey, business services and technology/media/telecoms posted very strong growth in activity. Solid growth was reported among financial services companies and those operating in the transport/tourism/leisure industries.”

The bank’s composite PMI of manufacturing and services stood at 54.1 in March, down from 55.4 in February, signalling a solid rise in business activity. 

Job creation among both manufacturers and service providers quickened, with manufacturing employment rising at the fastest pace in three months.