Activity in the services sector continued to expand in September but at the slowest rate of growth since February 2021, according to the latest AIB Purchasing Managers Index (PMI).

The Business Activity Index fell to 54.1, down from 54.7 in August and 56.3 in July.

Readings above 50 indicate overall growth in activity.

By comparison, the flash services PMI readings contracted in the UK and the euro zone last month, at 49.2 and 48.9, respectively.

The Irish survey covers four sub-sectors and the data show that the Transport/Tourism/Leisure sector was much weaker than the other three in September.

"Its Business Activity Index fell sharply to 49.3 from 54.8 in September," said Oliver Mangan, Chief Economist of AIB.

"Indeed, there were marked falls across all the survey’s main components of new business, outstanding business, employment and future activity in the Transport/Tourism/Leisure sector," he added.

For services as a whole, growth in new business remained strong, most notably in Technology/Media/ Telecoms and Business Services, although new export business fell back to its weakest level since January.

"There was another significant increase in backlogs of outstanding business, which firms partly linked to staff shortages," Mr Mangan said.

"In this regard, there was a further strong rise in employment, with the notable exception of Transport/Tourism/Leisure," he added.

Meanwhile, the data shows that the outlook of firms for the next 12 months weakened further on concerns about rising inflation and the risk of a recession.

The report states that businesses continued to experience acute upward pressure on input costs, especially energy prices and wages.

Mr Mangan said these continued to be passed on to customers in the form of higher price charges.

"The rate of increase in both input prices and prices charged remained very elevated in September, continuing to be amongst the highest on record," he said.