The country's services sector expanded at the fastest pace this year in October, a rapid rebound from two months earlier when growth almost flatlined, a survey showed today.
A sharp acceleration in new business pushed the AIB Ireland Services Business Activity Index to 56.7 in October from 53.5 in September and a 19-month low of 50.6 in August. A reading above 50 indicates growth in activity.
The rate of expansion outperformed those of the wider euro zone and UK.
The technology, media and telecoms subset led the growth, maintaining its robust growth from September at 60.9. Business services and financial services also saw accelerated growth, with indices of 59.2 and 55 respectively.
Transport, tourism and leisure only contracted fractionally with a subindex reading of 49.8.
Despite the surge in activity, employment grew at a slower pace than September. Notably, technology, media and telecoms firms saw the fastest decrease in employment since May 2020, despite increased output and orders.
Business confidence also dipped to a four-month low amid concerns over the sustainability of demand growth, despite optimism linked to expansion plans and rising new orders.
Input costs continued to rise sharply, driven by wage pressures, although the pace of cost inflation softened slightly. Output price inflation still accelerated for the third successive month, reaching the highest rate since May.
Inflation in the broader economy has hit 2.7% over the last two months, rising above the euro zone average for the first time in almost two years. The economy has been among the strongest performers in the bloc in recent years.
David McNamara, AIB's chief economist, said the October reading marks the fastest pace of growth since December 2024, driven by strong gains in new business.
"Overall, the rate of growth in the Irish services sector outperformed the euro zone, UK and US flash PMIs at 52.6, 51.1 and 55.2," he noted.
He said that overall, services employment rose in October, albeit at a slower pace than last month.
"However, a fall in TMT staffing levels restricted the overall pace of job creation across other sectors. Indeed, TMT employment decreased at the fastest pace since May 2020, despite the rise in output and new orders in that sector," he said.
On the inflation front, the AIB economist said that input price inflation remained elevated, mainly due to wage costs.
"The prices charged index was also higher, and above the longterm survey average, as firms continued to pass on higher costs to customers," he said.
"Looking ahead, firms in the Irish services sector were less optimistic on the prospects for expansion in activity levels over the coming 12 months. Confidence dropped to a four month low, but remained in positive territory, linked to expansion plans and hopes that new orders will continue to rise," he added.
