Services industry continues to grow

The number of people employed by businesses in the service industry rose again in July amid continued expansion in the sector.

Investec’s monthly Services Purchasing Managers’ Index (PMI) showed the sector continued to expand last month despite growth moderating slightly from the high seen in June.

The headline PMI figure of 61.3 was down slightly from the 62.6 in June. Any figure above 50 represents an expansion in business activity.

Investec Ireland chief economist Philip O’Sullivan said July was the 24th straight month in which growth was recorded in the sector.

He said it “shows that conditions remain very supportive for service firms. While the headline PMI moderated slightly to a four-month low of 61.3 in July, the sector has grown in each of the past 24 months.

“Services firms reported robust growth in new orders during July.”

All of the four service industry segments covered — business services; financial services; telecommunications; media and technology; and travel and leisure — enjoyed a simultaneous increase in new business for the 12th successive month. This, and the expectation of further growth, contributed to another rise in staff levels.

The rate of new export business improved to a three-month high in July, with the sequence of growth in this regard stretching to 36 months.

Firms also managed to show an overall level of profitability for the eighth successive month despite rising input costs, with higher salaries and the strength of sterling contributing to these increases.

According to Mr O’Sullivan, firms were able to pass some of these increases on to consumers through higher output prices, and they remain positive about the future.

“With improving trends evident both domestically and across Ireland’s key trading partners, we are optimistic of further impressive PMI releases over the coming months at least,” he said.

Meanwhile, data released yesterday by the CSO shows that information and communication service firms enjoyed strong growth in June as a result of the services sector expanding.