New business growth hit a nine-month high, generating another sharp rise in total activity in the Irish economy and lifting the outlook for 2025, according to the latest AIB Ireland Services PMI.
Figures for December signalled a further strengthening in demand conditions, as the volume of new work received by service providers increased at the fastest pace since March. Stronger increases in new business were recorded in transport, tourism and leisure, and technology, media and telecoms.
New business from international clients rose at the fastest rate in more than 18 months, with a notable boost to services exports in business services.
The seasonally adjusted AIB Ireland Services Business Activity Index fell only slightly to 57.1 in December, from 58.3 in November. The final reading of 2024 indicated a sustained sharp rise in services activity – the second-strongest since April 2023 – and the index remained well above the long-run trend level of 55.1. A reading above 50 indicates an overall increase compared to the previous month.
Service providers were their most optimistic on growth since February in December. Almost half (47 per cent) of companies expected an increase in business activity over the coming 12 months, up from 40 per cent in November, with reports of improving market conditions and new business opportunities. Overall confidence also rose above the long-run survey average at the end of the year.
The rate of job creation was the fastest since August, and in line with the long-run survey trend. The strongest pace of hiring growth was seen in technology, media and telecoms, although financial services posted broadly no change in workforce numbers since November.
Despite the sharper increase in staffing, the volume of outstanding business held at service providers increased at a faster rate in December, reflecting the sustained acceleration in new business growth throughout the fourth quarter. Financial Services recorded the steepest rise, AIB found.
Improving demand was accompanied by an uptick in inflationary pressures in December, with the seasonally adjusted input prices index rising to a seven-month high and back above its long-run trend level. Service providers continued to link higher costs to wages, and raised their charges again in December to compensate, the survey noted.
Commenting on the results, David McNamara, AIB chief economist, said: “The expansion in Irish services sector activity was underpinned by strong demand conditions. New business rose at its fastest pace since March and new export business growth accelerated to the fastest pace since May 2023. The volume of outstanding work also picked up and employment growth reached a four-month high, linked to firms targeting skilled and experienced staff to enhance business structures and meet workloads.”
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