AIB’s latest Services PMI shows that the recovery in the sector continued in August, as new business increased for the first time since February 2020. 

However, the growth was partly down to depletion of outstanding business and demand improved only slightly, with employment continuing to fall. 

The month-on-month increase in the index was only fractional, according to the report. Levels of confidence slipped for the second month running and remained weaker than the long-run survey average. 

Only two out of four monitored sub-sectors registered expansion, down from three in July. The strongest expansion was in business services, closely followed by technology, media & telecoms, which recovered from a dip in July. A slight decrease in activity was registered in transport, tourism and leisure following strong growth in July, while financial services activity fell. 

Chief economist Oliver Mangan (pictured) commented: "The Services PMI in August was 52.4  compared with 51.9 in July. The August reading is relatively low — the index stood at 59.9 as recently as February. Indeed, the reading for Ireland is lagging well behind the UK and US, where the August services PMIs came in at 60.1 and 54.8 respectively. 

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“However, the Irish data were better than the rest of the Eurozone, where the flash PMI fell back to 50.1.  New orders remained at subdued levels, largely due to continuing weak foreign demand. The weakness in export orders was evident in all four service sub-sectors. 

“With demand still soft , spare capacity rising and margins being squeezed with input costs rising and output prices falling, firms continued to cut their workforce. This saw employment contract for a sixth consecutive month.  Overall the PMI data show continuing challenging business conditions in the services sector." 

The full report is available here.