Irish services recovery lags euro zone on slower reopening - PMI

DUBLIN (Reuters) - Ireland's services sector shrank in June at its slowest pace since the coronavirus crisis began but underperformed the euro zone as a whole, a survey showed on Friday, reflecting the more gradual reopening of the Irish economy.

Ireland's cautious steps out of a lockdown imposed from March left large parts of the services sector including hotels, restaurants, hairdressers and most pubs shut until this week, when their limited resumption largely completed the reopening.

The AIB IHS Markit Purchasing Managers' Index (PMI) forservices staged a partial recovery as a result last month, improving to 39.7 from 23.4 in May and just 13.9 in April, but still well below the 50 mark that denotes growth.

Flash surveys in June for neighbouring Britain and the euro zone showed stronger rebounds to at or close to 47.0. The Irish survey peaked at a two-year high of 59.9 in February, then well ahead of both.

Three of the four Irish sub-sectors declined again in June, the survey showed, led by the transport, tourism and leisure sector. Activity in technology, media and telecoms sector rose for the first time since February, albeit only marginally.

A separate survey on Wednesday showed Irish manufacturing returned to growth in June.

"With activity still at depressed levels, employment in services continued to contract at a sharp pace in June. Order levels remained weak, leading to a further decline in outstanding business volumes as backlogs continued to fall," AIB Chief Economist Oliver Mangan said in a statement.

"The June PMI report, though, did see good month-on-month gains for all sub-components, suggesting the most severe phase of the contraction in business activity is behind us. Encouragingly also, there was a marked improvement in the 12-month outlook, which turned decisively positive."

(Reporting by Padraic Halpin; Editing by Hugh Lawson)