Service sector

Service sector growth slows as prices remain high

Growth in the country’s service sector slowed in June as price pressures remained high.

The AIB services PMI fell to 55.6 from 60.2 in May.

Readings above 50 indicate an overall increase in activity.

The latest reading signaled the smallest increase in activity since last December and capped a full quarter of slowing growth

However, the index remains above its long-term average and remains consistent with strong growth in activity.

The Irish index is also well above June services PMIs for the Eurozone and the UK of 52.8 and 53.4, respectively, as well as the US reading of 51.6.

Today’s PMI shows that the weakest growth was seen in business services, followed closely by transport, tourism and recreation, which have suffered a notable loss of momentum since May.

The latest data also signaled further elevated inflationary pressures in the services sector.

Input prices and charges rose at the fourth fastest rate on record.

Meanwhile, the future activity index weakened again to its lowest level since October 2020.

“The war in Ukraine and elevated inflationary pressures continue to weigh on the outlook for activity,” said AIB chief economist Oliver Mangan.

“In the meantime, businesses continued to face strong upward pressure on input prices, particularly fuel, energy, freight and wage costs,” he said.

“This in turn led to a very large increase in prices charged to customers for the fourth month in a row,” he added.