Service sector growth slows in June – The Irish Times

Growth in Ireland’s services sector slowed in June as new business grew at the slowest pace, according to the latest data from AIB’s Purchasing Managers’ Index. It comes on the news that business input prices rose at the slowest pace since February 2021.

Activity in the financial services sector was the strongest, registering a 57.6, with the technology sector following suit with a score of 56.2. Business services posted the strongest gain in the past few months, at 54.4. The index scale runs from 0 to 100; a number above 50 indicates growth, while a number below 50 indicates a decline in economic activity, compared with the previous month. The tourism sector posted a 47.2, its first decline since February 2023.

( Service sector production rises in April, expansion continues )

“Overall, Irish firms continued to report rising levels of new business, driven by domestic and international demand, albeit at a slower pace than in May,” said AIB chief economist David McNamara. “Backlog volumes also rose this month, but results varied across sectors.”

“Business sentiment about the prospects for activity over the next 12 months was positive, but the index fell to a 14-month low. Rising customer demand and the expectation of lower interest rates were again cited as sources of optimism for the year ahead.”

Demand for services rose in June, continuing a trend from March 2021. However, the number of new businesses grew more slowly in June, but companies reported a positive outlook for the next 12 months. A recovery in the economy, lower interest rates, new products and expanded sales teams, as well as companies from the US and UK were cited as potential sources of income. However, business sentiment was the weakest since April 2023.

( Abolishing bank tax would boost financial services sector, lobby says )

Expanding the customer base and increasing competitiveness were the drivers of new business. However, the pace of growth in the recent period was the weakest since January. Despite the slower growth in new business, the level of unfinished work continued to rise in June, with a noticeable increase in the financial sector.

Employment posted its weakest growth in more than three years, according to the data. Businesses’ reluctance to recruit more workers may explain the level of unfinished work as we approach the halfway point of the year. Three sectors saw their workforces grow at a slower pace than in May, while the tourism sector saw employment levels fall further.

Private-sector output was broadly unchanged in June after seven straight months of growth. The development reflected slower growth in services activity and a faster decline in industrial production.