According to AIB, the AIB Purchasing Managers’ Index (PMI) survey data for July 2022 on the Irish services economy signalled a further month of activity growth, with the rate of expansion accelerating on the month, amid a further sharp rise in inflows of new business.
AIB stated that the Services Business Activity Index rose from 55.6 in June to 56.3 in July, signalling the 17th consecutive monthly increase in services output, and one that was sharp overall.
Transport, Tourism And Leisure
According to AIB, activity growth accelerated to a sharp pace in transport, tourism and leisure (56.2), but new-business growth was weakest in this sector, and transport, tourism and leisure continued to see the strongest rate of charge inflation.
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AIB also stated that output in this sector increased at a solid pace overall, but it was still the second-weakest showing since February, and a further uplift in new business – albeit the weakest across the monitored sectors – drove growth, while employment growth remained muted, despite marked capacity pressures. The sector continued to see the strongest rate of charge inflation in July, amid a further but slower surge in input costs.
Statement By AIB Chief Economist
AIB chief economist Oliver Mangan stated, “The AIB Irish Services PMI for July showed a reacceleration in the pace of growth in the sector, in marked contrast to most other countries. The Business Activity Index rose to 56.3 from 55.6 in June, though this was still below the May reading of 60.2. It points to continuing strong growth in services activity. By comparison, the flash July Services PMIs fell in the Eurozone, UK and US to 50.6, 53.3 and 47.0, respectively, which are well below the Irish reading.
“In terms of the main components of the Irish survey, growth in new business remained strong, with the rate of increase in new export business picking up to a four-month high, amid stronger client demand. As a result, July registered another significant increase in backlogs of outstanding business, as pressure on capacity rose further. Meanwhile, there was yet another marked rise in employment, continuing the trend evident in the first half of the year.
“Growth was broad [...] across all the four subsectors covered in the survey, with financial services registering the strongest rate of expansion. There was a notable loss of momentum in technology/media/telecoms during July, however, business confidence for this subsector – as measured by the Future Activity Index – hit a three-month high, as it did in the services sector as a whole.
“Firms, though, continued to experience severe upward pressure on input prices – in particular, fuel, materials and labour costs – and also indicated that unfavourable exchange rate movements were adding to inflation. The higher costs are being passed on to customers, with the rate of increase in prices charged matching the survey peak hit in April.”
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