According to data from the AIB Purchasing Managers’ Index (PMI) survey for August 2022, service sector activity in Ireland continued to increase in August, however, the rate of growth slowed for the fourth time in five months as new business inflows continued to lose momentum, and the 12-month outlook also moderated, reflecting high inflation and fears of potential recession, but, more positively, input price inflation rates and output hit six-month lows and employment continued to grow at a healthy pace.
AIB said the services business activity index fell for the fourth time in five months to 54.7 in August from 56.3 in July.
Transport, Tourism And Leisure
According to the AIB, growth slowed in transport, tourism and recreation (54.8), but remained above the sector’s long-term trend expansion, and pressure on business capacity was the most evident in financial services and the transport, tourism and leisure sectors, with contribution prices rising the most in transport, tourism and leisure and financial services, both of which showed inflation rates faster than in July.
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AIB also reported that cost pressures remained high in August, particularly in the transport, tourism and leisure sector, and that transport, tourism and leisure saw the fastest rise in charges among the four sub-sectors monitored for the ninth consecutive month.
In addition, AIB said the transport, tourism and recreation sector saw an increase in activity at a pace that broadly matched that seen in the services sector as a whole in August, and growth remained much weaker than the trend for 2022 today, however, as did the expansion in new business.
Contrary to the trend for all services, input price inflation in the transport, tourism and leisure sector accelerated to a peak in two months and was the strongest of the four sectors followed, as was the inflation rate for charges, despite a slowdown since July.
Statement from the AIB Chief Economist
AIB’s Chief Economist, Oliver Mangan, said: “AIB’s Irish Services PMI for August showed that activity in the sector continues to expand at a healthy pace, although ‘It lost some momentum. The Business Activity Index fell to 54.7, which is the lowest reading since March 2021 and down from 56.3 in July and 55, 6 in June Activity in Ireland’s services sector, however, held up much better than elsewhere, with flash services PMIs falling to 50.2, 52.5 and 44.1 in the eurozone, UK United and the United States, respectively, in August.
“New business growth in Irish services businesses remained strong, although it has slowed for the sixth month in a row. Meanwhile, export new business was the weakest since January. Businesses reported attributed the slowdown in demand to rising inflation and weaker UK markets.Nevertheless, there was another significant increase in outstanding order books indicating that demand, although slowing, stays strong enough.
“Growth was broad-based across all four sub-sectors covered by the survey, although business services lagged the others. Encouragingly, new business growth remained solid across all four sectors. Overall business confidence in services, while still quite positive, weakened somewhat from July onwards reflecting concerns about rising inflation and a possible recession.
“Companies continued to face strong upward pressure on input prices, but the rate of input price inflation eased to its lowest level in six months. customers, but like input prices, the rate of increase in invoice prices has also fallen to its lowest level in six months, so there are signs that inflationary pressures may be starting to ease somewhat.
© 2022 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to subscribe to the Hospitality Ireland printed edition.