Activity in the tourism and leisure sector contracted in July
The transport, tourism, and leisure sector was the only services sector that did not see an increase in employment during July.
Business activity in the Irish services sector continued to grow during July despite the transport, tourism, and leisure sector experiencing a contraction, with higher input costs and a “sharper decline” in staffing being reported by firms.
According to the latest AIB Purchasing Managers’ Index (PMI), the services sector grew last month but at a slower rate. The PMI stood at 53.6 in July — down from 54.2 in June, which signalled the slowest increase in Irish service sector activity for three months.
The pace of expansion was weaker than the long-run series average of 55.1.
The rate of growth in the Irish services sector remained faster than the eurozone and UK flash PMIs at 51.9 and 52.4, respectively, but below the US Services PMI at 56.0.
The PMI is a survey of businesses operating in the services sector. The index is a single-figure indicator of the performance of the sector, with any figure greater than 50.0 indicating an overall improvement in the sector.
Chief economist at AIB David McNamara said the PMI showed continued growth in the services sector during July despite the slight fall.
"Overall, Irish firms continued to report rising levels of new business, and this was linked to domestic and international demand. The volume of outstanding work also rose at a faster pace on the month,” he said.
Three of the four sub-sectors monitored for the PMI recorded growth during July, with only transport, tourism and leisure seeing a contraction.
The PMI stood at 58.1 in the financial services sector — making it the fastest growing sector — followed by the technology, media, and telecoms sector at 55.6. The business services sector grew slightly, at 51.7.
Transport, tourism, and leisure, on the other hand, recorded a PMI of 47.4 — its second successive monthly contraction. It was the only sector that did not see an increase in employment during the month and instead a “sharper decline in staffing was indicated”, according to the PMI.
Transport, tourism, and leisure also reported the strongest cost pressures in July, while the business services the weakest.
Mr McNamara said the pace of input cost inflation “ticked up” during the month, with wages, fuel and transport costs being cited as the main sources of higher costs by respondents.
“Firms also continued to raise prices for customers, but the output price index was little changed on the month.”
According to AIB, the demand for services in Ireland continued to rise during the month. New business was linked to new customers, new projects and acquisitions.
The technology, media, and telecoms sector recorded the largest growth in new business during July, while there was a drop in new business in transport, tourism, and leisure for the first time in six months.
Faster growth of both new and outstanding business lifted companies' forecasts for activity over the next 12 months.
Overall sentiment was the strongest since February, with firms citing a more positive economic outlook, new clients, new markets and investments in staff.
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