The service sector demonstrated strong growth in November, according to the AIB Purchasing Managers Index (PMI). The index rose to 54.2 from October’s 52.6, indicating increased activity and new business.
All sub-sectors experienced higher levels of activity, with the technology, media, and telecoms sector leading the way. This growth was driven by improved demand conditions, including accelerated new business growth and a rebound in new export business.
Additionally, the transport, tourism, and leisure sector saw a notable recovery after a four-month downturn. Despite a tight labour market, employment levels increased.
While inflationary pressures persisted, operating costs saw the lowest rate of increase since April 2021. Compared to other major economies, the Irish service sector outperformed the UK, euro zone, and the US.
Notably, the technology, media, and telecoms sector showed the strongest growth.
Growth in Service Sector
The service sector experienced a significant growth of 1.6 points in November, according to the AIB Purchasing Managers Index (PMI). The index, which measures total activity and new business, reached 54.2 in November, up from 52.6 in October.
All four sub-sectors registered higher activity during this period, with the technology, media, and telecoms sector experiencing the fastest growth. This improvement in demand conditions was evident as growth in new business accelerated for the first time since April. Additionally, there was a renewed rise in new export business, particularly in the transport, tourism, and leisure sector, which rebounded following a four-month downturn.
Despite rising costs, including higher wages, the service sector in Ireland outperformed other economies, with the Irish index surpassing readings from the UK, the euro zone, and the US.
Improvement in Demand Conditions
An increase in demand conditions was observed in the service sector in November. According to the AIB Purchasing Managers Index (PMI), there was a significant improvement in overall activity and new business.
The index reached 54.2 in November, up from 52.6 in October. All four sub-sectors experienced higher activity, with the technology, media, and telecoms sector leading the way in terms of growth.
The service sector also saw a boost in new export business after a decline in October. The transport, tourism, and leisure sector bounced back following a four-month downturn, driven by a strong increase in new business, including from overseas.
Furthermore, employment rose at a strong rate, reflecting the positive demand conditions in the sector.
Inflationary Pressures and Costs
Demand conditions in the service sector in November were accompanied by notable inflationary pressures and rising costs.
Wages remained a key source of rising costs, putting upward pressure on input prices. However, inflationary pressures eased further in November compared to previous months.
The rate of increase in operating costs also fell to the lowest level since April 2021. Despite this, higher operating costs were passed on to customers through higher selling prices.
In an international comparison, the Irish index for November outperformed other readings around the world, including the flash services PMI in the UK, the euro zone services PMI, and the US services PMI.
Within the service sector, growth in the technology, media, and telecoms sector was the fastest, while growth in financial services and business services was more modest.
Notably, the transport, tourism, and leisure sector experienced a significant rebound in activity.
International Comparison
International Comparison: Performance in the Irish service sector in November surpassed that of other economies around the world. According to the AIB Purchasing Managers Index (PMI), the Irish service sector experienced a significant growth rate, with the index reaching 54.2 in November, compared to 52.6 in October.
In comparison, the flash services PMI in the UK stood at 50.5, the euro zone services PMI at 48.2, and the US services PMI at 50.8. These readings indicate that the growth in the Irish service sector outperformed these economies.
Notably, the technology, media, and telecoms sector in Ireland exhibited the fastest growth, while the transport, tourism, and leisure sector recorded the most significant improvement since October.
This international comparison highlights the strong performance of the Irish service sector in November.
Industry-Specific Performance
The technology, media, and telecoms sector demonstrated the strongest growth in November. According to the AIB Purchasing Managers Index (PMI), the service sector as a whole experienced an increase in total activity and new business. The index reached 54.2 in November, up from 52.6 in October. All four sub-sectors registered higher activity during this period.
The transport, tourism, and leisure sector also rebounded following a four-month downturn, showing notable improvement. However, growth in business services was only modest.
In terms of international comparison, the growth in the British service sector outperformed other economies such as the UK, euro zone, and the US.
Conclusion
In November, the Irish service sector demonstrated strong growth, surpassing other major economies. The sector’s performance was driven by improved demand conditions, marked by increased new business and a recovery in new export business.
Despite inflationary pressures, operating costs increased at their slowest rate since April 2021.
Symbolically, this increase in the service sector represents resilience and adaptability in the face of challenges, highlighting the strength and potential of the Irish economy.
