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Inflation picks up in services sector, according to AIB Purchasing Managers’ Index

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Inflation in the services sector rose for the first time in four months in February, to its highest level in more than 21 years, according to the latest Purchasing Managers’ Index (PMI) from AIB.

Employment service providers highlight wages and energy prices as key drivers of higher costs, as well as fuel, insurance, transport and UK customs.

On the flip side, carrier fees to customers rose at their fastest rate since October 2000, and the third-biggest increase on record.

The service sector – which includes industries from bars to hotels to banking – is the largest contributor to the country’s economy.

Price pressures last month were most acute in the transportation, travel and entertainment sectors, while financial services faced the weakest cost pressures for the twelfth consecutive month.

“Businesses continue to come under marked upward pressure on input prices, particularly due to higher labor and energy costs, as well as fuel, insurance, transport and UK customs. Input price inflation is the fastest in more than 21 years,” said Oliver Mangan, chief economist at AIB.

“Meanwhile, prices charged to customers are also growing at their fastest pace since 2000. Price pressures are strongest in the transportation/travel/entertainment sectors.”

Overall, activity in the sector accelerated to a four-month high, as new business expanded the most in more than six years.

The Services Business Activity Index rose to 61.8 in February, from 56.2 in January. Any reading above 50 indicates growth.

The monthly growth rate is the clearest record since the series began in 2000.

Companies link improving market conditions with the post-pandemic economic recovery, the lifting of Covid restrictions, new services and new customers.

New job growth accelerated in all four sectors, with notable increases since January in transportation, travel and entertainment.

New workloads from international clients also increased for the twelfth consecutive month in February.

Much stronger new business growth put more pressure on operating capacity last month, due to staff and supply shortages.

https://www.independent.ie/business/inflation-surges-in-services-sector-according-to-purchasing-managers-index-from-aib-41404845.html Inflation picks up in services sector, according to AIB Purchasing Managers’ Index

Fry Electronics Team

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