Portuguese Services Billed 2.1 Percent More in July and Sold 2.6 Percent Less, With Hotels and Restaurants Falling for a Fourth Month

Portugal's service sector took in 2.1 percent more money in July than it did a year earlier. It also sold 2.6 percent less. Both numbers come from the same release, published by Instituto Nacional de Estatística (Statistics Portugal, or INE) on Friday, and the gap between them is the whole story.

The Índice de Volume de Negócios nos Serviços (Services Turnover Index), adjusted for seasonal and calendar effects, grew 2.1 percent year on year in nominal terms in July. That is a deceleration of 2.5 percentage points on June. Deflated, which is to say stripped of price effects, the same index fell 2.6 percent. In June the real decline had been 0.1 percent. Month on month, the nominal index dropped 1.6 percent after expanding 2.6 percent in June.

Growth in euros and contraction in volume is a familiar pattern by now, but the size of the divergence in July is new. Consumer price inflation was running at 3.3 percent year on year in August, on INE's own figures. Services are charging more and moving less.

Where the money came from, and where it did not

Transport and storage was the strongest contributor by a distance, growing 5.0 percent year on year, an acceleration of 0.3 points on June, and adding 1.3 percentage points to the aggregate.

Consultancy, scientific and technical activities came second, contributing 0.6 points. But the underlying figure collapsed: this section grew 15.7 percent in June and 4.2 percent in July. Administrative and support service activities added 0.4 points on growth of 2.6 percent, down from 4.5 percent.

Two sections pulled the other way. Information and communication contracted 0.8 percent, a rate 4.5 points below June's, taking 0.1 points off the total. And accommodation, catering and similar activities fell 0.9 percent year on year, subtracting 0.2 points.

That last one is the figure worth pausing on. It is the fourth consecutive month in which Portuguese hotels, restaurants and cafés have posted a year-on-year fall in nominal turnover, and July is the heart of the season. Turnover in this section is not being squeezed by a weak month. It has been shrinking since the spring, through the period it is supposed to be making its year.

Employment in services turned negative

The labour side of the release carries the sharper signal. Calendar-adjusted, the July indices show employment down 1.3 percent year on year, wages up 4.9 percent and hours worked up 0.6 percent. In June the same three read plus 1.5 percent, plus 7.1 percent and plus 2.0 percent.

Employment in services went from growing to shrinking in a single month. The month-on-month employment index fell 2.0 percent in July, against a 0.8 percent rise in the same month of 2025, so this is not a seasonal artefact repeating itself. Hours worked rose 3.9 percent on the month, against 5.4 percent in July 2025: fewer people, working somewhat longer.

Services are where most Portuguese jobs are. An employment index that turns negative in the country's busiest month, while wages still rise close to 5 percent, describes employers holding on to fewer, better-paid staff rather than hiring into the season.

What this means for residents of Portugal

• Prices are doing the work, not volumes. If your household costs for services have risen faster than what you feel you are getting, that is visible in the national data: nominal up 2.1 percent, real down 2.6 percent.
• Hospitality is weaker than the tourist numbers suggest. Four straight months of falling turnover in accommodation and catering is a warning for anyone whose income depends on that sector, whether as an operator, a landlord to one, or an employee.
• Job hunting in services just got harder. The services employment index went from plus 1.5 percent in June to minus 1.3 percent in July, a swing of 2.8 points in a month. Expect fewer openings and slower hiring decisions into the autumn.
• Wages are still moving. The wage index rose 4.9 percent year on year. If you are employed in services and your pay has not moved, the sector average says there is ground to argue over.

INE publishes the August figures next month, and the reading to watch is whether accommodation and catering makes it five months. Transport and storage is currently holding the whole index up on its own.