The most recent data from the AIB Purchasing Managers’ Index unveiled a moderation in Irish service sector expansion during June, as a slower rate of new business growth was recorded. Concurrently, an uptick in input costs was observed, however, this was at the mildest pace since February of last year.
Within various industries, the financial services sector manifested the most significant levels of activity, scoring 57.6 on the index, with the tech sector trailing closely at 56.2. Over the past few months, business services experienced the most robust growth, registering 54.4 on the scale. The assessment scale, which ranges from 0 to 100, signifies economic growth when scoring above 50 and contractions when falling below this number, in comparison with the previous month’s data. A contraction was observed in the tourism industry for the first time since February 2023, presenting a score of 47.2.
Irish businesses reported a steady rise in new business due to both national and international demand, albeit at a lesser speed than in May, according to AIB’s chief economist, David McNamara. There was a noted increase in pending workload in the latest month, but the performance was inconsistent across sectors.
While businesses displayed a positive outlook concerning activity in the next 12 months, the optimisation index decreased to its lowest figure in 14 months. Anticipated lower interest rates and growing customer demand were once again cited as reasons for the forthcoming optimism.
June saw a surge in service demand, keeping up the trend started in March of the prior year. The rate of new business growth, however, decelerated in June, even though businesses showed a positive perspective for the coming 12 months. An economic upturn, falling interest rates, projected income from new products and sales force expansion, and business from the US and UK are viewed as potential revenue sources. However, the overall business sentiments were at their most subdued since April 2023.
New business was boosted by an enlarged customer base and increased competitiveness, although growth in the most recent period was at its lowest since January. Despite the deceleration in new business expansion, incomplete work levels continued to rise in June, particularly in the financial services industry.
Data revealed the slowest increase in job figures in more than three years. The unwillingness of firms to hire more personnel could be the explanation for the volume of unfinished tasks as we approach the mid-year mark. A slower employment growth in three different sectors compared to May was reported, along with a continued drop in staffing levels within the tourism industry.
Following seven successive months of expansion, June saw little variation in the output in the private sector. This occurrence is indicative of the slower increase in service activity coupled with a more rapid decrease in manufacturing output.