Services sector sees 'subdued' levels of growth

New business and total activity increased at weakest rates in just over a year

Technology, media, and telecoms was the fastest growing services sub-sector during February. 

The Irish services sector saw a “subdued” level of growth during February, with both new business and total activity increasing at the weakest rates in just over a year, the latest AIB Purchasing Managers Index shows.

The PMI reading for the services sector stood at 53.2 during February — a slight decline from the 53.4 recorded in January. AIB said this signalled “solid but slower growth”. The reading is calculated based on the volume of business activity in the sector compared with one month previously. The index varies between 0 and 100. with any reading above 50 indicating growth.

This reading extended the current expansionary sequence to four years. The rate of growth in the sector remained faster than similar readings in the eurozone, at 50.7, the UK, at 51.1, and the US, at 49.7.

AIB chief economist David McNamara said despite the sector recording growth during February, new business “increased at its slowest pace since January 2024, and new export business also rose only marginally in February”.

“However, the volume of outstanding work accelerated from January’s weak pace, with robust activity across most sectors,” he said.

Growth was recorded across all four service sub-sectors, with technology, media, and telecoms growing the fastest while the business services sub-sector recorded the slowest growth levels.

The rate of job creation was the fastest in six months and broadly in line with the long-run series average. For the first time since last November, all four sectors posted higher staffing.

Inflation remains an issue for firms, as input costs rose again in February, with higher wages and energy being cited as the main drivers.

“In terms of the outlook, firms remained optimistic for business activity in the coming 12 months, linked to expected new business developments and clients,” Mr McNamara said.