The value of services produced in the Republic declined in October compared with September, Central Statistics Office (CSO) data published on Tuesday indicates.
The sector, which includes everything from hotels and hairdressers to IT firms and telecoms, has been rebounding strongly from the pandemic. However, there has been concern in recent months that the cost-of-living squeeze may weaken demand, dragging down spending on services.
While the value of services produced within the economy in October was 22.6 per cent higher than pre-pandemic February 2020 and more than 14 per cent higher than October 2021, the CSO’s monthly services index slumped 1.4 per cent between September and October. The volume of services output, meanwhile, increased by a modest 0.2 per cent.
The subsectors with the biggest monthly decline were administrative and support services, a diverse category that includes recruitment and other industries that support business operations. The value of the subsector’s output declined 5.2 per cent while the volume of output declined 8.2 per cent month on month.
Other sectors to register notable monthly declines in the output value were wholesale and retail trade (-3.2 per cent), transportation and storage (-2.3 per cent), and information and communication (-1.1 per cent).
On the upside, the value of output in the accommodation and food services subsector increased 1 per cent in October and has increased 30.8 per cent over 12 months from a low base last October when public health restrictions remained in place.
The figures tally with recent purchasing managers’ index (PMI) surveys of the sector. On Monday, AIB’s latest services sector PMI indicated that activity slowed to a crawl in November as demand weakened in the face of higher prices.
The index registered growth for the 21st successive month in November, but moved lower for the seventh time in eight months “to signal only a fractional rate of expansion”, AIB said. The latest figure of 50.8, down from 53.2 in October, was the lowest over the current sequence and below the 22-year long-run trend level of 55.1 for the fourth straight month, it said.
The rate of job creation within the sector was also at its weakest in 2022 so far.