Pace of growth slows in services sector but hiring remains strong

Irish Independent

06-05-2025

But new figures published this morning by AIB show that the sector still remained in expansion mode and grew at a faster pace than in the eurozone, the UK and the United States last month.
The overall AIB Ireland Services Purchasing Managers' Index for April stood at 52.8, compared to 55.3 in March. Any figure over 50 indicates expansion, and any below, contraction.
Reported new business grew at its slowest rate in 18 months and the 12-month outlook was the weakest last month since October 2020. That uncertainty came amid the fallout from Donald Trump's push to impose tariffs and the boarder financial market volatility that ensued.
'That said, companies continued to expand their workforces at a robust rate and outstanding business increased further, while inflationary pressures softened,' notes the AIB report.
All but one of the segments within the services sector grew, with transport, tourism and leisure posting a reading of 48.1. That was the second monthly decline in activity for that segment, and it contracted at a faster pace than previously.
Last week, figures from the Central Statistics Office (CSO) that showed a further drop in tourism during March were disputed by the Irish Tourism Industry Confederation and the Irish Hotels Federation.
According to the CSO, the number of foreign visitors to Ireland during March tumbled 15pc to 441,000. The visitors spent €326m on their trips, not including fares. That was 22pc lower than what was spent in March last year.
But bodies representing the tourism and leisure sector said this has not been the experience of their members.
The latest AIB PMI survey shows employment growth at Irish service providers remained solid last month, for both full and part-time positions.
The increases were seen across the transport, tourism and leisure sectors, as well as in business services, technology, media and telecoms.
ADVERTISEMENT
Financial services saw the fastest jobs growth since 2024, putting in another strong monthly performance.
David McNamara, AIB chief economist, said that Irish services firms remain optimistic and that inflation has eased. 'On the inflation front, the input cost index declined for the first time this year, with wages remaining the main driver of higher costs,' he said.
'Similarly, the price charged index also fell in April, although it remained well above its long-run average,' he added.
'Meanwhile, firms in the Irish services sector remained optimistic on the prospects for expansion in activity levels over the coming 12 months.
'However, the strength of sentiment continued to soften, falling to its lowest level since October 2020. Firms cited the potential impact of US tariffs, financial market turbulence and uncertainty in relation to international trade.'
Average input prices increased at the weakest rate in five months, and at one that was broadly equal to the long-run survey trend. Charges also increased at the softest pace in five months, but still remained above the long-run trend.