Irish services sector expands at fastest rate in more than 20 years
Inflationary pressures evident in latest purchasing managers’ index data from AIB
Irish service sector companies reported the strongest month-on-month growth in business activity in July since August 2000 as lockdown restrictions eased further and the Health Service Executive’s vaccination programme accelerated.
The latest purchasing managers’ index (PMI) survey data, published by AIB, shows new services business at the fastest rate since January 2016, while incomplete workloads rose the most in more than two decades despite a faster expansion of the workforce.
Services employment rose for the fifth month running and at the fastest pace since February 2017.
Inflationary pressures were also signalled by the latest data, with input cost inflation the highest in 13 years. As a result, charges by service providers rose the most in more than 5½ years.
AIB’s services business activity index gave a reading of 66.6 last month, compared to 63.1 in June, meaning the rate of expansion increased to the third-highest pace since the survey began in May 2000.
Companies linked higher activity to the lifting of more restrictions and greater consumer confidence.
AIB chief economist Oliver Mangan said the “rapid” rebound was driven by the release of pent-up demand, with the Irish reading coming in above the flash PMIs for July services activity in both the UK and the euro zone.
While demand in the Irish economy has surged, growth in new export business has not been as robust.
“It has been held back in part by a continuing contraction in business from overseas in transport and tourism,” Mr Mangan said.
“Most encouragingly, the growth in business activity was broad-based, increasing very strongly in all four sub-sectors covered in the survey for a fourth consecutive month.”
The strongest rate of growth was seen in the transport, tourism and leisure category, which registered another near-record pace of growth. Financial services, business services and technology, media and telecoms also had strong months.
The PMI follows the Central Statistics Office’s release of June figures showing the value of Irish services output increased 8 per cent on a monthly basis. It was also 15.9 per cent higher than it was in June 2020 and 3.3 per cent higher than it was in June 2019.