Activity picked up again in Ireland’s services sector in July with a surge in new business, according to the latest AIB Purchasing Managers Index.
It is the 17th consecutive monthly rise for the index, signaling a strong recovery for the sector after the most difficult months of the Covid-19 pandemic.
Services business confidence also improved to a three-month high amid optimism about a sustained economic recovery.
Growth was broad-based across the various sub-sectors, with financial services showing the fastest expansion.
The survey results contrasted with Tuesday’s manufacturing index, which showed a drop in activity, raising fears that the Irish economy was showing signs of weakness.
“AIB’s Irish services PMI for July showed a further acceleration in the pace of growth in the sector, unlike most other countries,” said AIB’s chief economist, Oliver Mangan.
“New business growth remained strong, with the rate of increase in new export business reaching a four-month high amid stronger customer demand. ongoing business, as pressure on capacity has increased further.
He added that there was another marked increase in employment, continuing a trend evident in the first half of the year. The job creation partly reflects greater optimism among businesses about increased activity in the coming year.
Sentiment was at its highest level since April as businesses looked forward to a sustained period of economic rebound. Inflation remains a serious problem for service companies, but the rate of cost inflation has slowed to its lowest level in five months. However, companies were able to raise prices faster than input costs rose, helping to offset the impact of inflation.
Energy, material costs and exchange rates continued to dampen, but headline inflation rose at its slowest pace since December.