Cost Pressures In Irish Services Sector Grew In August
According to The Irish Independent, cost pressures in the Irish services sector grew in August amid rising inflation.
In response, those in the service sector passed on higher prices to customers, with charges rising for the sixth month running.
Irish Service Sector
The services sector, which spans industries from hotels and bars to banking, is the biggest contributor to the country’s economy.
Input price inflation in the sector accelerated for the fourth month running to the highest since December 2000, according to the latest AIB Services Managers PMI.
Anecdotal evidence from survey respondents linked higher costs to salaries, fuel, Brexit, travel, insurance premiums and freight charges.
It comes as inflation in the eurozone increased to its highest level in almost a decade in August.
The eurozone's annual inflation was 3 percent for the month, up from 2.2 percent in July.
In the services sector here, the rate of inflation was the highest since October 2000.
Overall, the Services Business Activity Index registered 63.7 in August, down from 66.6 in July but nonetheless signalling another marked increase in Irish services output. Any reading over 50 is deemed growth.
The month-on-month rate of expansion slowed for the first time in the current six-month growth sequence, but was still the second-strongest since January 2016.
New business rose for the sixth month running in August as pent-up consumer demand continued to be released with the lifting of COVID-19 pandemic-related restrictions.
The rate of expansion slowed to a three-month low but was still the third-fastest in the past four and a half years.
Strong inflows of new work resulted in another "substantial increase" in outstanding business last month.
On the back of increased demand, employment in the sector rose for the sixth month running in August.
However, while the rate of job creation was strong and well above the long-run survey average, it eased last month in line with the trend seen for new business and total activity.
Commenting on the data, AIB chief economist Oliver Mangan reportedly said that cost pressures "continue to build".
"Input price inflation rose to its highest level since December 2000 on a broad range of price rises. This saw prices charged to customers increase at their fastest pace since October 2000," Mangan reportedly said.
Confidence among service providers improved in the last month.
Approximately 58% of firms expect higher activity by August next year, linked to returning confidence and more normal trading conditions with the full removal of COVID-19 pandemic-related restrictions.
July Spending And Prices
The above news follows news from earlier this week that card spending on hotels, restaurants and transport increased in July, as well as last month's news that prices in licensed premises, restaurants and hotels in Ireland increased year-on-year in July and news that spending in Irish hospitality venues increased in July
© 2021 Hospitality Ireland – your source for the latest industry news. Article by Conor Farrelly. Click subscribe to sign up for the Hospitality Ireland print edition.