Service sector growth moderates, input costs fall sharply

July 4, 2024

Growth in the country’s service sector moderated slightly in June, bringing jobs growth to a near standstill but a sharp drop in input costs offered welcome relief to firms, a survey showed today.

The AIB Global S&P Purchasing Managers’ Index fell to 54.2 from 55 in May, broadly in line with the trend for the first half of 2024, having held above the 50 mark separating growth from contraction since March 2021.

The rate of growth remained faster than the euro zone and UK flash PMIs at 52.6 and 51.2, respectively.

The slight easing in growth was driven by firms adding new business at the slowest rate since January. The transport, tourism and leisure saw its steepest decline in activity since October 2023, and also shed jobs during the month.

That led to employment across the service sector increasing at the slowest rate in 40 months. Unemployment is currently at a near-record low of 4%.

The rate of input price inflation slowed at one of the sharpest monthly rates in the survey’s 24-year history to stand at the weakest level since February 2021 and below the long-run trend.

An index measuring prices charged by services firms eased to a seven-month low but remained relatively high, the survey’s authors said.

The Central Bank has said it expects inflation across the economy to be around the European Central Bank’s target of 2% this year and next, but policymakers remain concerned about the stickiness of services inflation.

Article Source – Service sector growth moderates, input costs fall sharply – RTE

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