Irish service sector companies reported the strongest growth in business activity since August 2000 in July, according to the latest AIB PMI survey.
New business expanded at the fastest rate since January 2016, while incomplete workloads rose the most in over two decades despite faster workforce growth.
The latest survey data also signalled rising inflationary pressures, with input cost inflation the highest in 13 years. As a result, charges by service providers rose the most in over five-and-a-half years.
“The AIB Irish Services PMI for July points to the quickest pace of expansion in the sector in two decades,” said Oliver Mangan, Chief Economist with AIB. “The business activity index rose to 66.6 from 63.1 in June and 62.1 in May. This is the highest reading since August 2000 and the third month in a row that the index has been above 60. It points to a rapid rebound in services activity, driven by the release of pent-up demand as lockdown restrictions are gradually lifted.”
The Irish reading is above the flash Services PMIs for July in the UK and eurozone, which came in at 57.8 and 60.4, respectively.
Consistent with this, the July data show surging demand in the Irish economy, with new business increasing at its fastest pace since January 2016.
Growth in new export business, while improving, is not as robust. It has been held back in part by a continuing contraction in business from overseas in Transport & Tourism.
“Most encouragingly, the growth in business activity was broad-based, increasing very strongly in all four sub sectors covered in the survey for a fourth consecutive month,” Mr Mangan said. “The strongest growth was recorded in the Transport/Tourism/Leisure sector as hospitality starts to re-open. The pick-up in new business saw the volume of outstanding work rise at its fastest pace in over twenty years.”
Meanwhile, employment posted another strong increase in July.
Cost pressures continue to intensify, with input price inflation hitting its highest level since 2008 on a broad range of price rises. This saw prices charged to customers increase at their fastest pace in nearly six years.