Irish services sector growth surges to 5-year high on reopening -PMI

Growth in activity in Ireland’s services sector surged to its highest level since early 2016 in May as the country’s economy began to emerge from one of Europe’s strictest COVID-19 lockdowns, a survey showed on Thursday.

The AIB IHS Markit Purchasing Managers’ Index (PMI) jumped to 62.1 in May from 57.7 in April. That is up from a 2021 low of 36.2 reported in January and is just the sixth time the index has crossed the 50-mark separating expansion from contraction since the COVID-19 pandemic hit.

Ireland reopened all retail stores, personal services and non-residential construction in May, with hotels and outdoor dining due to follow in early June and indoor dining in early July.

The reopening has lead to a release of pent-up demand that drove new business to increase at its fastest pace since early 2017, AIB Chief Economist Oliver Mangan said in a statement. Employment expanded for the third month running.

Growth in new export business slowed, however, including a contraction in business from overseas in the Transport and Tourism sector due to continuing restrictions on international travel. The government has promised to resume EU, UK and U.S. travel from July 19.

Cost pressures continue to build, with input price inflation hitting its highest level since 2008. The fact that prices charged to customers are increasing at a more moderate pace, points to a continuing margin squeeze in the sector, Mangan said.