Ireland services PMI shows strongest growth of 2025 in October

The Irish services sector recorded its strongest growth in 2025 during October, with the AIB Ireland Services Business Activity Index climbing to 56.7 from 53.5, driven by a significant acceleration in new orders across most sectors, particularly Technology, Media & Telecoms. Despite rising input costs linked to wage pressures and quickening output price inflation, business confidence, though easing slightly, remained optimistic, with the sector notably outperforming its Eurozone, UK, and US counterparts.

Analysis

The Irish services sector demonstrated robust growth in October 2025, with the AIB Ireland Services Business Activity Index rising to 56.7 from 53.5 in September, marking its fastest expansion of the year. This acceleration was primarily driven by a significant increase in new orders, which recorded their fastest growth year-to-date, and strong business activity across most sectors. Notably, the Technology, Media & Telecoms (TMT) sector maintained the strongest growth rate at 60.9, while Business Services and Financial Services also saw faster expansion.

Despite the strong activity, inflationary pressures persist, with input prices continuing to rise rapidly, often linked to wage pressures, though the pace of increase softened slightly. Concurrently, output price inflation quickened for the third consecutive month, reaching its fastest level since May. Staffing levels increased only modestly and at a slower pace than in September, leading to the first accumulation of outstanding business in three months, indicating potential capacity constraints.

The AIB Ireland Composite PMI Output Index, which includes manufacturing, also rose to 53.7, indicating the strongest overall business activity since May, despite unchanged manufacturing output. The Irish services sector notably outperformed flash PMIs from the Eurozone (52.6), UK (51.1), and US (55.2), highlighting its relative strength. While business confidence eased to a four-month low, firms remain optimistic, citing expansion plans and expectations for continued new order growth.

Key Decisions for Investors

• Investors should monitor Irish economic resilience, given the strong services sector performance and outperformance against major economies, for implications on Irish-exposed assets.
• Assess the persistent inflationary pressures, particularly rising input and output prices linked to wage pressures, for their potential impact on corporate margins and consumer spending power.
• Evaluate sector-specific opportunities within the TMT, Business Services, and Financial Services sectors due to their robust growth, while exercising caution in the Transport, Tourism & Leisure sector.