Service sector growth falls to 19-month low in August, PMI shows
There was a continued slow down in growth in the services sector last month, according to the latest Purchasing Managers’ Index from AIB.
The index dropped to 50.6 from 50.9 in July, marking the slowest pace of growth since January 2024.
The fall was driven by marginal gains in output and new business, and a fall in employment.
Overall, the rate of growth in the Irish services sector underperformed the euro zone, US and UK flash PMIs at 50.7, 55.4, and 53.6, respectively.
AIB’s chief economist David McNamara said new business grew at “a modest, albeit accelerating pace in August compared to July”.
“However, outstanding business declined in August, reversing the small gain in the prior month,” he said.
Mr McNamara said from a sectoral perspective, just two of the four sub-sectors expanded output and new business last month compares with July.
Technology, Media & Telecoms remained the best performing of the four sectors, followed by robust growth in Business Services.
Financial Services activity was flat, while the Transport, Tourism & Leisure sector registered a decline in activity for a sixth consecutive month.
“Overall, employment fell on the month, with the index falling to its lowest level since October 2020. For the first time since July 2020, all four sub-sectors recorded lower staff levels, led by sharp declines in the Transport, Tourism & Leisure sector,” David McNamara said.
He said the lower headcounts were linked to “natural attrition, higher costs and aligning capacity with current workloads.”
On the inflation front, input price inflation was higher, owing to wage and administrative cost pressures, according to the latest services PMI.
The prices charged index was also slightly higher, and above the long-term survey average.
Despite the weak current activity levels, firms in the Irish services sector remained optimistic on the prospects for expansion in activity levels over the coming 12 months, with sentiment ticking up slightly on last month.
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