Irish tourism, transport, and leisure businesses reported an eighth successive monthly decline in activity levels in October despite an easing of the cost inflation that has dogged the sector this year.
AIB’s latest purchasing managers’ index (PMI) for the wide-ranging services sector indicates what the bank described as “a marked pick-up” in growth among services firms.
However, transport, tourism, and leisure remained the laggard of the four subsectors, the bank said.
It was the only sector to record a drop in business activity in October, although the rate of contraction was “marginal” and the weakest in the current eight-month sequence of decline, according to the report.
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Cost pressures within the subsector eased somewhat in the month but remained on an upward trajectory. However, tourism, transport and leisure businesses increased their own prices at a faster rate than the previous month, passing on costs to consumers.
Based on a survey of 400 businesses, the report indicates a rise in general activity levels across the services sector and an increase in new orders.
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The headline index rose to 56.7 last month, up sharply from 53.5 in September and well above the neutral 50 threshold, which separates an expansion from a contraction in activity levels.
“This marks the fastest pace of growth since December 2024, driven by strong gains in new business,” said David McNamara, chief economist at AIB.
“New business grew at an accelerating pace in October, underpinned by a strong rise in new export business,” he added. “Outstanding business also rose in October, reflecting a recent recovery in new client demand.”
Less positive was the rate of job creation across the broad services sector, which slowed somewhat in the month.
The rate was affected by a fall in technology, media and telecoms employment, which slipped at the fastest pace since May 2020, despite a rise in new orders and output in the subsector, Mr McNamara said.
Technology, media and telecoms remained the best performing of the four subsectors, however, “followed closely by robust growth in business services”.
The financial services sector also gained momentum, according to the report.
“On the inflation front, input price inflation remained elevated, owing largely to wage costs,” Mr McNamara said. “The prices charged index was also higher, and above the long-term survey average.”
Meanwhile, Irish firms were less optimistic about their prospects in October than they were in September.
Confidence among services businesses that they can expand activity levels over the next 12 months dipped to a four-month low, “but remained in positive territory, linked to expansion plans and hopes that new orders will continue to rise”, Mr McNamara said.
