There was a marked slowdown in the rate of expansion in activity in the services sector in January, according to AIB in its latest Purchasing Managers’ Index.
The overall index came in at 50.5 in the month – just above the 50 breakeven point that separates expansion from contraction in a given sector.
It was the weakest rate of expansion in the sector in three years, the report noted.
Firms continued to report rising levels of new business, but the pace of growth eased to the second weakest in 13 months.
The volume of outstanding work fell for the first time in 35 months, albeit marginally.
New exports order growth accelerated at the fastest pace in five months.
“At the sectoral level, divergences in activity were clearly evident. Two of the four sub-sectors covered in the survey registered growth overall – led by strong growth in Financial Services, with Business Services and Transport Tourism & Leisure seeing monthly declines,” David McNamara, AIB chief economist, said.
“Employment also continued to rise, and the pace of job creation accelerated on the month. Business sentiment about the prospects for activity over the coming twelve months remained at an elevated level, helped by increasing expectations of a recovery in the wider economy in 2024,” he added.
The report noted a strengthening of inflationary pressures in the month, with the rate of input price inflation picking up for a second consecutive month.
Firms reported higher labour costs as the main source of inflation.
“These higher operating costs were passed on to customers, with prices charged for services rising at their quickest pace in seven months,” Mr McNamara explained.