HomeBussinessPace of expansion slows but services sector continues to grow

Pace of expansion slows but services sector continues to grow


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The Irish services sector data includes everything from banking to cafes. Photo: Getty

The Irish services sector continued to expand in April but the pace of growth and job creation slowed.

The latest AIB Purchasing Managers Index (PMI) survey for services showed the tech sector was a key source of weakness last month while financial services powered ahead.

The slow down in job creation was also a feature of the manufacturing sector data earlier in the week.

The services index fell from 56.6 in March to 53.3 in April, the weakest pace of expansion since January although any reading above 50 shows growth.

The latest data means Irish services – which captures everything from banking to cafes – has been in continuous expansion for three years and two months, even with the country ‘officially’ in recession last year.

With inflation easing across the economy, the latest data shows wages and fuel were the main reported sources of higher input costs in April. AIB chief economist David McNamara said the rate of growth in the sector here remained faster than both the US and the eurozone, but was behind the UK services PMI.

“Overall, Irish firms continued to report rising levels of new business, and this was linked to robust domestic and international demand,” he said.

Meanwhile, the Organisation for Economic Cooperation and Development (OECD), a club for mostly high-income countries, said the Irish economy will grow only marginally this year (0.9pc) but significantly faster in 2025 when it expects gross domestic product (GDP) to expand by 2.9pc, helped by the strength of the resilient labour market.

The body which provides regular advice to member states, including Ireland, backed the Government’s decision to squirrel some windfall corporate tax gains into savings funds.

It also warned that planned large investments under the National Development Plan to close housing and infrastructure gaps risk coming undone due to shortages of skilled labour.

It said effective prioritisation and sequencing of investment projects will be key to delivery. The OECD said the global economy is growing faster than expected thanks to resilient US activity while inflation is converging more quickly than expected with central banks’ targets. However, the speed of recoveries diverged widely, with sluggish Europe and Japan offset by the United States.

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