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The rate of activity in the business sector increased significantly last month when compared with September, in the largest increase so far this year. The technology, media and telecoms (TMT) sector recorded the sharpest increase in activity, followed by the business services category. However, output price inflation accelerated at the fastest rate since May. This was compounded by a decrease in business optimism and softer job creation, according to the AIB report. Out of the four subsectors, financial services posted the fastest rise in input prices in almost two-and-a-half years. Softer increases were seen in business services and in transport, tourism and leisure. The TMT sector recorded no change. According to AIB chief economist David McNamara: “On the inflation front, input price inflation remained elevated, owing largely to wage costs. The prices-charged index was also higher and above the long-term survey average, as firms continued to pass on higher costs to customers.” In terms of employment, rising activity and business investment plans meant that employment increased in the Irish services sector for the second month. The rate of job creation was modest, however, and slower than that seen in September. The index noted a continued fall in TMT staffing levels, with employment in that sector decreasing at the fastest pace since May 2020. When looking to the future, with the rates of expansion in business activity and new orders accelerated in October, business confidence still decreased amid market uncertainty and concerns about the sustainability of demand growth. Sentiment dropped to a four-month low and was below the index’s average. Where companies were confident in the outlook for business activity, this was linked to expansion plans and hopes that new orders will continue to rise. Financial services posted the strongest optimism, with the weakest in business services. The AIB Ireland Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies.
