Growth in Ireland's service sector slowed slightly in June, causing a near standstill in job creation, according to a survey released on Wednesday. However, a significant drop in input costs provided much-needed relief to businesses. The AIB Global S&P Purchasing Managers' Index (PMI) for the service sector fell to 54.2 in June from 55.0 in May, aligning with the trend for the first half of 2024. Despite this decline, the index remained above the 50 mark that separates growth from contraction, a threshold it has held above since March 2021. The growth rate in Ireland's service sector was still faster than that of the eurozone and UK, with flash PMIs at 52.6 and 51.2, respectively. The moderation in growth was primarily due to firms adding new business at the slowest rate since January. The transport, tourism, and leisure sectors experienced their steepest decline in activity since October 2023 and also saw job losses in June. Overall, employment in the service sector increased at its slowest pace in 40 months, even as Ireland's unemployment rate remained near a record low of 4 per cent. Input price inflation for the sector fell at one of the sharpest monthly rates in the survey's 24-year history, reaching its lowest level since February 2021 and falling below the long-term trend. Prices charged by service firms also decreased to a seven-month low, though they remained relatively high, according to the survey's authors. Ireland's central bank forecasts inflation across the economy to be close to the European Central Bank's target of 2 per cent for this year and the next. However, policymakers continue to express concern about persistent inflation in the services sector. Attribution: Reuters.
