The service sector of the Irish economy continued to grow in December, though at a slightly slower rate than in November, according to the latest survey from AIB.

The bank’s services PMI (purchasing managers’ index) recorded 53.2 – down from 54.2 in November.

Any figure above 50 means that activity rose. The PMI has been above 50 since March 2021.

Exports a bright spot

"Irish firms continued to report rising levels of new business, but the pace of growth slowed in December to the second weakest in 2023,” said AIB’s chief economist Oliver Mangan.

“Similarly, while the volume of outstanding work continued to rise, it was at one of the slowest rates in the past three years. One bright spot was new exports orders, which hit their highest level since August, with the UK mentioned as a source of growth,” he continued.

While employment levels in the sector continued to rise in December, the pace of job creation was the slowest for almost three years. Employment fell in the category covering transport, tourism, and leisure.

Higher costs passed on

The survey showed that inflationary pressures strengthened, with the rate of cost inflation picking up for the first time in six months.

Firms reported higher wages, utilities and insurance costs. These were passed on to customers, with prices charged for services rising at the fastest rate in three months.

Business sentiment about the prospects for activity over the coming 12 months hit its highest level since May, however, helped by growing expectations of interest-rate cuts in 2024