The services economy made a “soft start” to 2025, the latest AIB purchasing managers index (PMI) for the sector has showed.
Growth of new business and total activity were maintained in January, but at the weakest rates in nine and four months respectively.
The index reading of 53.4, down from 57.1 in December, showed that services activity still expanded during the month, but at a slower pace.
Outstanding work barely rose and employment was broadly unchanged, with job cuts recorded in financial services, the survey found. Inflationary pressures rose to the highest since last May.
On a more positive note, the 12-month outlook for business activity improved further to the highest since last February.
“The expansion in January was driven by an increase in new and outstanding business, but employment fell marginally on the month,” AIB chief economist David McNamara said.
“New business rose at its slowest pace since September 2024 and new export business also eased for the first times in six months.
“The volume of outstanding work also slowed to a modest pace of growth in January, signalling a softening in activity across the sector.”
The transport, tourism and leisure subsector registered the fastest growth, while there were more modest gains in technology, media and telecoms as well as in business services and financial services.
“On the inflation front, the input cost index was higher once again, implying continued rising cost pressures in the sector,” he said.
“Wages and utilities were cited as key drivers of higher costs. The rate of increase in prices charged also accelerated, as firms protected margins, despite a softer demand environment.
“In terms of the outlook, firms remain optimistic for business activity in 2025.
“The future activity index rose to its highest level since February 2024, linked to new projects and business opportunities domestically and abroad.”
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
