There was a rise in activity in the services sector last month, according to the latest AIB Purchasing Managers' Index (PMI).

The survey suggests that the rise was driven by renewed growth in new business and exports.

Employment was up for only the second tine since the start of the Covid-19 pandemic, while confidence was at the highest since mid-2018 as firms expected an economic revival as the vaccination roll out continues.

However, the survey shows that cost pressures intensified further in March.

The Services Business Activity Index varies between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.

The index rose sharply to 54.6 in March, from 41.2 in February.

This signalled the first expansion in services activity since last December, and the strongest rate of growth since February 2020.

The latest figure was only slightly below the long-run survey average of 54.8.

The 13.4-point rise in the headline figure at the end of the first quarter was the second-largest on record since the survey began in 2000, behind only the 16.3-point gain in June 2020.

"This signals improved business conditions in the sector rather than activity returning to more normal levels," said Oliver Mangan, AIB Chief Economist.

"Much of the services sector remains in lockdown, but the data suggest some businesses are now better able to cope with Covid restrictions," he added.

Sub-sectors

Three out of four monitored sub-sectors registered higher business activity in March.

The strongest rate of expansion was in financial services, followed by business services and technology, media and telecoms respectively.

Activity in transport, tourism and leisure declined for the eighth month running, but at the slowest rate since last August.