Irish services industry defies slowdown to keep hiring more people in July

Another bright spot was in recruitment as services firms anticipated taking on more work in future months.

The services part of the economy continued to grow "strongly" in July and continued to hire, defying the rapid slowdown to affect manufacturing, the latest survey has revealed. 

The AIB survey of purchasing managers working in the services industry showed that the growth was led by financial services firms, and came as companies passed on costs to their customers in higher prices. A similar survey of Irish manufacturing reported earlier this week that growth in the output of factories had expanded last month, but had slowed dramatically, as the global inflation crisis bites.

However, growth in Irish services industry in July "was broad based across all the four sub-sectors covered in the survey, with financial services registering the strongest rate of expansion," according to the AIB survey.  

"Firms, though, continued to experience severe upward pressure on input prices, in particular, fuel, materials and labour costs and also indicated that unfavourable exchange rate movements were adding to inflation," the survey found. "The higher costs are being passed on to customers, with the rate of increase in prices charged matching the survey peak hit in April," it said.

Another bright spot was in recruitment as services firms anticipated taking on more work in future months. "The rate of job creation re-accelerated to a sharp pace, driven by noticeable uplifts in hiring across both business services and financial services...with confidence linked to expectations of a sustained economic rebound," the survey reported. 

Meanwhile, retail spending has increased in the capital despite the inflation crisis, according to new figures. Dublin City Council and the three other councils in the city said spending grew in the three months to the end of June, according to the survey they conduct with Mastercard. 

Total retail spending in the capital increased 1.6% from the previous quarter "despite rising cost-of-living challenges", according to the survey which acknowledged that  "increasing inflationary pressures are likely to be a major headwind for consumer spending in the coming quarters". Spending in the last quarter was buoyed by a 9% increase in entertainment, it said.

The latest surveys come amid new evidence of the effects of the fallout from rising prices across the world. The Organisation for Cooperation and Development said on Wednesday consumer inflation in the OECD was running at 10.3% in June, up from 9.7% in May. 

"This represents the sharpest price increase since June 1988. Year-on-year inflation, which continues to be impacted by food and energy prices, increased in all countries except Germany, Japan and the Netherlands," the Paris-based organisation of which Ireland is one of its members, said. 

Ireland has posted 9.1% inflation for June. Turkey had the highest inflation rate in the OECD of over 78%, while Japan had the lowest at 2.4%.