Services sector growth slows in December

Financial services recorded the sharpest increase in growth across the entire services sector. 

The services sector in Ireland saw a slowdown in growth during December with business activity rising at the softest rate in three months and employment increasing only modestly, the latest AIB Services Purchasing Managers Index (PMI) shows.

During December, the PMI recorded a reading of 54.8 — down from the 58.5 recorded in November which had been the highest rate of growth recorded in three and a half years at that point. The latest figure signalled the softest rate of expansion in output since last September.

The PMI is calculated based on questions to businesses on changes in the volume of business activity compared with one month previously. Any figure above 50 denotes growth in the sector.

Overall, the fourth quarter of 2025 as a whole registered the fastest growth since the second quarter of 2023, although on an annual basis growth in 2025 was the slowest since 2020.

The rate of growth in the Irish services sector continues to outperform the eurozone, UK, and US flash PMIs of 52.6, 52.1 and 52.9, respectively.

Chief economist at AIB, David McNamara, said the PMI still implies “robust growth” in the sector driven by gains in current activity, new business and employment.

"New business grew at a solid pace in December but slowed from November's 43-month high. This rise reflected continued broad-based growth across sectors and in export orders,” Mr McNamara said.

The services sector is divided up into four sub-sectors of which three expanded during the month.

Financial services recorded a reading of 63.7 — the sharpest increase of the four sub-sectors — while technology, media, and telecoms had a reading of 54.2, and business services had a reading of 52.2.

Transport, tourism, and leisure was the only sub-sector to record a contraction with a reading of 47.3.

"Overall, services employment rose modestly in December but eased from the exceptional pace in November. A continued sharp fall in technology, media, and telecoms employment dampened growth overall,” said Mr McNamara.

Input price inflation fell to its lowest levels since July, however, wages, insurance and energy costs, continued to be cited as cost drivers by Irish firms.