Ireland’s services sector expanded at its fastest pace in eight months during July, supported by stronger demand, rising new business, increased hiring and easing cost pressures, according to the latest AIB S&P Global Services Purchasing Managers’ Index (PMI).
The index rose to 55.2 in July from 54.2 in June, remaining comfortably above the 50-point threshold that separates expansion from contraction. The latest reading also outpaced preliminary PMI figures for the eurozone, the United Kingdom and the United States, highlighting the continued resilience of Ireland’s services industry.
The survey found that stronger customer demand, higher sales and continued investment in business capacity helped drive activity across the sector. New export business also strengthened, recording its fastest growth since December 2024, suggesting that international demand for Irish services continued to improve.
Technology, Media and Telecommunications remained the strongest-performing segment of the economy. The sector recorded a PMI reading of 61.4, its strongest expansion in almost three years, reflecting sustained investment and robust demand for technology-related services.
Business Services also posted solid growth with a reading of 55.4, overtaking Financial Services, which recorded 52.6. Although activity in Transport, Tourism and Leisure remained below the growth threshold at 49.4, the sector experienced its slowest decline in the current five-month downturn, indicating that business conditions may be stabilising.
The survey also pointed to an easing in inflationary pressures. Input price inflation slowed for the third consecutive month after reaching a 40-month high in April. Cost increases have now returned to a level broadly consistent with the survey’s long-term average.
Among the different sectors, Transport, Tourism and Leisure experienced the strongest rise in input costs, while Financial Services recorded the weakest increase in operating expenses. Cost inflation in Financial Services was the lowest since March 2021, suggesting that price pressures continue to moderate across parts of the economy.
Businesses also reported improving confidence about the months ahead. According to the survey, optimism climbed to its highest level in seven months, supported by expectations of stronger economic activity, new contract wins and continued investment.
David McNamara, Chief Economist at AIB, said business sentiment continued to strengthen during July as companies became increasingly optimistic about future growth.
He said firms cited new business opportunities, ongoing investment and expectations of broader economic expansion as the main factors supporting confidence.
The latest PMI figures suggest Ireland’s services sector has maintained solid momentum despite a challenging international economic environment. Strong domestic demand, improving export activity and moderating inflation are helping businesses expand operations while supporting employment and investment, providing another indication that the country’s largest economic sector continues to perform strongly heading into the second half of the year.
