Irish Tourism Business Declines for Fifth Month Amid Slowing Services Sector Growth

Irish tourism and leisure businesses experienced a fifth consecutive month of declining activity levels in July, according to AIB's purchasing managers' index. The headline index fell from 51.5 in June to 50.9, just above the neutral 50 threshold. Despite the slowdown, businesses continued to increase prices. The transport, tourism and leisure subsector saw the largest decline, with weaker levels of growth across the services sector mainly attributed to a slowdown in new business expansion.

Irish tourism and leisure businesses reported a fifth successive monthly decline in activity levels in July, according to AIB's latest purchasing managers' index (PMI) report. 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 [1].

The transport, tourism, and leisure (TTL) subsector recorded the most significant decline, with a fifth consecutive monthly drop in activity. This decline was driven by a further slowdown in new business expansion across the services sector [1]. Despite the slowdown, businesses continued to increase prices, with cost pressures remaining highest among TTL firms. However, 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 [1].

The decline in tourism activity aligns with a broader slowdown in inbound tourism to Ireland. According to the Central Statistics Office (CSO), the number of tourists visiting the Republic in June was down 2% compared to the same month last year, despite a 6% increase from June 2023 [2]. The CSO's latest figures revealed that visitors spent a total of €646.5 million in June, excluding fares, which represented a decrease of 5.5% compared with June 2024 [2].

The UK’s service sector also experienced a slowdown in July, with the S&P Global UK services PMI survey scoring 51.8, down from 52.8 in June [3]. The survey pointed to slowing business activity in the face of sluggish demand at home and abroad, with firms reporting the fastest decrease in their order books for around two-and-a-half years [3].

The current economic backdrop, characterized by elevated global economic uncertainty, is likely contributing to the subdued confidence among clients and increased headwinds for businesses in both Ireland and the UK [3]. Despite these challenges, businesses in both countries continue to adapt, with some sectors reporting increased prices and a focus on cost management.

References:
[1] https://www.irishtimes.com/business/2025/08/06/tourism-business-levels-dip-for-fifth-month-in-a-row-in-july-aib-survey-shows/
[2] https://www.rte.ie/news/business/2025/0730/1526122-cso-inbound-tourism-figures/
[3] https://www.irishnews.com/news/uk/service-industry-growth-slows-as-firms-hit-by-sluggish-demand-R6E2KGDBUBMWRMSTC7QJPTQ6QA/