Irish tourism and leisure businesses reported a fifth successive monthly decline in activity levels last month but continued to increase prices amid a slowdown in growth across the wider services sector, AIB said on Wednesday.
Based on a survey of some 400 companies, the bank’s latest purchasing managers’ index (PMI) report suggests continued growth in activity across the wide-ranging services sector in July, albeit at a slower pace than the previous month.
The headline index fell from 51.5 in June to 50.9, just nine basis points above the neutral 50 threshold, which separates an expansion from a contraction in activity levels.
AIB chief economist David McNamara said the bank’s latest PMI shows a “further easing in growth” across the services sector.
RM Block
Three subsectors registered growth in activity in July. Technology, media and telecommunications was the best-performing sector, but recorded a slower rate of overall growth in the month compared to June, as did both the business and financial services sectors.
The transport, tourism and leisure (TTL) subsector, meanwhile, recorded a fifth successive monthly decline in activity, AIB said.
It added that weaker levels of growth across the four sectors at the start of the third quarter “mainly reflected a further slowdown in new business expansion”.
Did the EU have its hands tied before striking a trade deal with the US?
This was apparent in the TTL sector, which also posted a fifth consecutive decline in new work and “at a faster pace” of contraction than the previous month, according to the report.
Overall, services sector firms continued to add jobs in July, but at the softest pace in six months and below the long-run average. The business services and TTL subsectors, however, posted marginal falls in staffing levels.
There was some relief for services businesses on the cost inflation front with the rate of input price growth remaining at its lowest level since September 2024, Mr McNamara said.
“The prices charged index was also in line with the June reading – itself the lowest level in over four years,” he added.
However, cost pressures remain highest among TTL businesses, which also reported a sharp increase in the prices they charge customers for their services, AIB said.
Confidence about the next 12 months was also at its weakest level among TTL firms, according to the survey. In general, however, services businesses were more optimistic about their future financial prospects in July than they were in June, with confidence at the highest level seen since March.
The bank’s latest snapshot comes against a backdrop of a slump in inbound tourism to the Republic in recent months.
The Central Statistics Office (CSO) has recorded a decline in the number of tourists visiting the State and their expenditure in the first half of the year compared to the same period in 2024
However, the CSO’s latest figures, published last week, revealed that the decline softened in June, typically one of the busier months for inbound visits.
The data reveals that visitors spent a total of €646.5 million in the month, excluding fares, which represented a decrease of 5.5 per cent compared with June last year.
With annual drop-offs of 21 per cent, 10 per cent, 22 per cent and 31 per cent recorded in May, April, March and February, the June decline was far less pronounced than in previous months.
