Investing.com — Ireland’s services sector expanded at one of its weakest rates in five years during March as the outbreak of war in the Middle East drove up costs and dampened business confidence, according to the AIB Ireland Services PMI survey released Tuesday.
The AIB Ireland Services Business Activity Index fell to 50.7 in March from 51.8 in February, marking the fourth consecutive monthly decline and the slowest growth rate in seven months. The reading signaled only a slight expansion, well below the long-term average of 55.0.
Three of four sectors posted modest growth. Business Services registered an index of 51.5, Financial Services came in at 51.0, and Technology, Media & Telecoms reached 51.4. Transport, Tourism & Leisure contracted with a reading of 47.6, its ninth decline in 12 months.
New business growth slowed for the fourth straight month to its weakest pace since August, while new export business remained broadly flat.
Input costs surged at the sharpest rate in three years. Survey respondents attributed higher expenses to fuel, energy, wages, pension contributions, raw materials and professional services, with the Middle East war and supply chain disruption cited as contributing factors. Transport, Tourism & Leisure recorded the fastest cost increases among sectors.
Service providers reduced staffing levels in March, marking only the third employment decline in five years. Jobs fell slightly in three sectors, while Financial Services posted a marginal increase.
Business confidence weakened to its lowest level since October 2020. Companies cited uncertainty about the war’s impact on the global economy and domestic consumer confidence as weighing on their outlook.
The AIB Ireland Composite PMI Output Index, which combines manufacturing and services data, eased to 52.1 in March from 52.5 in February, indicating the slowest private sector expansion in six months.
David McNamara, AIB Chief Economist, noted the services PMI of 50.7 showed very modest growth, with activity levels weakening amid slower new business growth and rising costs linked to the Middle East war.
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