The Irish services sector recorded a steep rebound through June, although inflation in the sector is at its highest level in 13 years.

The AIB PMI survey shows that the lifting of lockdown restrictions and the opening of more sectors of the economy made a significant impact in June. The overall PMI rose to 63.1 in June from 62.1 in May.

Total activity, new work and outstanding business all increased at the fastest rates since January 2016, while employment rose the most since September 2017. The 12-month outlook remained strongly positive as firms expect a continued recovery from the pandemic.

The strongest rate of growth was signalled in Transport, Tourism & Leisure, which almost equalled the record rate of expansion set in September 2000.

Growth eased since May in Technology, Media & Telecoms, and Business Services, and accelerated in Financial Services.

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The surge in demand for services continued in June, with new business increasing for the fourth month running and at the fastest rate since January 2016. Firms reported new work linked to business reopenings and the lifting of lockdown restrictions.

According to the AIB survey, domestic demand remained the main growth driver in June, as new export business continued to increase more slowly than total new work.

By sub-sector, new business increased most in Transport, Tourism & Leisure, which set a new record rate of growth.

The ongoing revival in demand led to greater pressure on business capacity in June. The level of outstanding work rose for the fourth month running, and at the fastest rate since January 2016.

Incomplete work rose despite a faster rate of workforce growth in June. Service sector employment increased for the fourth successive month, and at the strongest pace since September 2017. Job creation was most prominent in Technology, Media & Telecoms.

Services sector companies in Ireland remained highly optimistic regarding the 12-month outlook for business activity in June. Sentiment eased only slightly since May and was the second strongest since September 2017.

The June Services PMI indicated a further intensification of inflationary pressures in the Irish service sector.

The rate of input price inflation accelerated for the fourth time in five months to the highest since July 2008. Fuel, wages, insurance, utilities, freight and Brexit-related costs were all reported to have risen during the month.

Companies continued to pass on higher costs to end customers in June, with average prices charged rising at the fastest rate since November 2018.