The Irish services sector saw growth soften in December following an “exceptional” performance in November, according to new data.
The AIB Ireland Services Purchasing Managers Index (PMI) indicated that activity in the sector retreated from a more than three-year high of 58.5 in November to 54.8 in December, according to the bank. Any figure greater than 50 indicates overall improvement in the sector.
“This still implies robust growth, driven by gains in current activity, new business and employment,” said AIB chief economist David McNamara.
He said new business continued to grow at a “solid pace” in the final month of the year, despite retreating from the 43-month high in November, due to “continued broad-based growth across sectors and in export orders”.
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On a sectoral basis, only the transport, tourism and leisure industry registered a fall in activity, having seen a retreat in activity for nine of the 12 months in 2025.
In contrast, the financial services sector saw the strongest growth, reaching a two-and-a-half year high. Growth slowed “notably” in the business services and technology, media and telecoms subsectors in the period.
New business for Irish services companies grew for the sixth straight month, but the rate of growth was considerably lower than the strong growth seen in the previous three months.
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This fed into the overall measurement of new business for firms which showed solid growth, though less than in November.
Employment in the services sector “rose modestly” in December, Mr McNamara said, but “eased from the exceptional pace in November”. The modest growth for services overall was dampened by a continued employment decrease in the technology, media and telecoms area, compared to “robust job creation” elsewhere.
The continued rise in job creation has been driven by increased demand and by Irish companies tapping into new markets, the bank said.
Input price inflation, which fell to the lowest level since July, remains high, with wages, insurance and energy costs being cited as drivers of costs.
The measure of prices being charged by companies was also lower than the previous month but remained above the long-term average. While firms continue to pass on higher costs to customers, they also passed on the input cost decreases in December.
The rate of output growth for the domestic sector, at 53.6, remains well in advance of that in other countries across the euro zone, which, at 52.8, saw a more moderate expansion in business activity. In the US, the regional index topped 54.2, slightly in advance of Ireland, while the UK continued to lag behind, with a reading of 51.2.
The level of optimism in the Irish services sector remains strong, with new products, recruitment and the rebounding EU and UK markets cited.
