Services sector growth slows in August as employment hits lowest since 2020

Irish services sector recorded only marginal growth in August, with tourism and leisure dragging jobs to lowest levels since 2020

The transport, tourism, and leisure sub-sectors were the worst performing segment of the services sector in August. File picture: Getty

The services sector saw slow growth during August — with the tourism and leisure sector being the weakest performer — leading to the overall level of employment falling to “lowest levels since October 2020”, the latest AIB Services Purchasing Managers Index (PMI) shows.

During August, the PMI had a reading of 50.6, down from the 50.9 recorded in July. The PMI is calculated based on a survey of firms on the changes in the volume of business activity compared with one month prior. Any number above 50 denotes an increase in activity.

This PMI measures activity across four different sub-sectors and in August just two of these expanded output and new business.

Technology, media, and telecoms remained the best performing of the four sub-sectors, with a reading of 53.8, followed by robust growth in business services, with a reading of 51.3.

Financial services firms registered no change in activity while transport, tourism, and leisure, with a reading 46.0, registered a sixth successive monthly decline and at the fastest rate since June.

The PMI said that with work-in-hand declining, and new business growth running below trend, “Irish service providers cut staffing”.

Chief economist at AIB David McNamara said that overall employment fell during the month with the “index falling to its lowest level since October 2020”.

“All four sub-sectors recorded lower staff levels, led by sharp declines in the transport, tourism, and leisure sector. Lower headcounts were linked to natural attrition, higher costs and aligning capacity with current workloads,” he said.