Ireland services sector growth slows to six-month low in June

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Services activity in Ireland expanded at the slowest pace since the end of last year, figures on Tuesday showed, rounding off a slightly difficult quarter.

The latest AIB Ireland services business activity index fell to 55.6 points in June, still above the 50.0 threshold separating growth from decline, but slowing from 60.2 in May.

June's figure signalled the weakest growth since December, S&P Global said. Although it sealed a second quarter of expansion, growth slowed. The index trended around 59.2 points in the second quarter, down from 60.5 in the first. It was the weakest quarterly performance since the 44.0 points registered in the first quarter of 2021.

New business grew for the 16th month in-a-row in June, though at the weakest pace since January.

‘Firms reports that demand continued to be driven by a post-pandemic recovery, although there were reports that concerns over inflation and geopolitical instability had weighted on sales. The moderation in the pace of expansion was not as marked as that seen for total business activity, which was reflected in the strongest growth in outstanding business at service providers in three months,’ S&P Global commented.

‘With inflationary pressures remaining strong, and ongoing global political uncertainty linked to the war in Ukraine, Irish service providers were less optimistic regarding the 12-month outlook for business activity. Expectations were the weakest since October 2020, and below the long-run survey trend.’

The wider composite PMI - compiled using a weighted average of the services and manufacturing readings - slowed markedly to 52.8 points in June from 57.5 in May. It was the slowest expansion in the current 16-month sequence of growth.

‘Data indicated a fall in manufacturing production for the first time since February 2021, and the weakest increase in services activity in six months,’ S&P Global added.

Figures on Friday showed the manufacturing sector in Ireland saw its first decline in over a year in June.

The AIB Ireland manufacturing purchasing managers' index dropped to 53.1 in June from 56.4 in May.

The AIB services survey features a panel of 400 firms, with data collected in the second half of the month.

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