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Growth in the country’s service sector picked up in January, according to the latest AIB Services Purchasing Managers’ Index (PMI).

The data shows that activity and new business throughout the month increased at faster rates.

The business activity index rose for the second month running, climbing to 54.1 from 52.7 in December and 50.8 in November.

By comparison, the flash Services PMIs for the UK and US remained well into contraction territory in January at 48.0 and 46.6, respectively, with the index for the euro zone standing at a subdued 50.7.

Oliver Mangan, AIB’s chief economist, said the Irish data shows there was a marked pick up in new business volumes last month, including in new export business, reflecting an improvement in demand.

“This resulted in a significant increase in backlogs of outstanding business, with signs of growing capacity constraints,” he said.

The figures show there was a further rise in employment, but at a modest pace, amid indications of tightness in the labour market.

Meanwhile, firms’ confidence about the outlook for the next 12 months rose to its highest level since last February.

“As has been the case for the past six months, the Services PMI in January continued to be weighed down by a very weak performance in the Transport/Tourism/Leisure sector,” Mr Mangan said.

“It registered a very low reading of 40.1 for business activity. By contrast, the other three sectors covered in the survey expanded strongly in the month,” he explained.

Today’s data suggests that inflationary pressures in the services sector, while still strong, eased further in January.

“Businesses continued to report upward pressure on wages and energy costs, but the rate of increase in input prices fell to a 19-month low,” Mr Mangan said.

“Higher costs are still being passed on to customers, but the rate of increase in selling prices eased to its lowest level in 16 months.”

Article Source: Growth in service sector picks up in January – Gill Stedman – RTE

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