Activity in the State’s services sector expanded again in September with “new business growth” hitting a 10-month high.
AIB’s latest purchasing managers’ index (PMI), however, highlighted rising inflationary pressures from higher wages and energy costs.
The prices or fees charged by service businesses – which covers everything from hotels and hairdressers to IT firms and telecoms – rose at their sharpest rate in five months, it said.
Economists expect the price squeeze on businesses from higher energy prices to worsen in the short term, even if a deal in the Middle East is reached.
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AIB’s latest PMI for services fell from 55.4 in August to 54.1 last month, signalling slightly slower growth. Any figure above 50 indicates expansion.
“Activity levels were boosted by existing and new business, alongside renewed gains in employment,” AIB chief executive David McNamara said.
He also noted that rate of growth was ahead of the flash euro zone and UK PMIs at 53.0 and 51.7 respectively, but below the US PMI at 58.7.
“New business continued to grow strongly following a dip in activity earlier in the year, although new export business growth eased on the month,” he said.
“Higher activity was driven by new clients and marketing efforts. In that context, the volume of outstanding work rose at the fastest pace in over two years,” McNamara said.
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AIB’s report indicated that input price inflation rose further in September, reaching its highest since May.
The bank said increased input prices reflected elevated wage pressures, alongside higher fuel and energy costs.
There were signs of rising capacity pressures in the Irish services sector with growth in the level of outstanding business, it said. Nonetheless, all four sub-sectors of AIB’s barometer registered higher activity in September.
The technology, media and telecoms sector posted the fastest expansion (58.3), followed by transport, tourism and leisure (56.3). Business services (51.5) and financial services (51.2) both registered more moderate growth.
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The report said new business at Irish service providers rose for the fifth consecutive month running in September, and at the strongest rate since November 2025.
“Increased demand reflected new clients and greater marketing efforts,” it said.
Firms in the sector were also confident about the 12-month outlook for business activity.
“Overall confidence improved for the sixth month running to the highest since February 2025, linked to planned business investments, new contracts and marketing efforts,” it said.
