Service providers continue to pass on costs as inflation remains 'sticky'

Tech and telecoms service providers continued to see buoyant growth, while businesses in transport, tourism, and leisure contracted for a third consecutive month

The AIB purchasing managers index registered a 'solid' reading of 54.5 for the services sector, down somewhat on the levels of 55 and 56.7 recorded in August and July respectively.

Inflationary pressures continued to weigh on service providers last month, which they subsequently passed on to consumers as firms rebuild their margins post-pandemic, according to a survey.

The AIB purchasing managers index (PMI) for the service sector showed some businesses recorded a slower growth rate of new business, but a significant rise in outstanding work kept the sector in expansion territory.

AIB chief economist Oliver Mangan said: 

Stickiness in services inflation is evident, with the strong rate of increase in both input and output prices easing only slightly over the past six months. 

Service providers working in the technology, media, and telecoms areas continued to see buoyant growth, while businesses in transport, tourism, and leisure contracted for a third consecutive month.

The survey registered a “solid” reading of 54.5 for the sector, down somewhat on the levels of 55 and 56.7 recorded in August and July, respectively. The reading is the lowest since January.

The flash services PMIs remained in contraction territory during September in the eurozone and Britain at 48.4 and 47.2, respectively. 

A separate AIB PMI released earlier this week showed Irish factories saw new orders fall at the fastest pace so far this year last month, driven by a lacklustre demand in key export markets including Britain and the eurozone.