The data is drawn from 400 companies across a range of service sectors – from banking to hotels – and is collected in the second half of each month.
A reading above 50 on the index indicates an overall increase, while a reading below 50 shows a decrease in comparison to the previous month’s results.
The seasonally adjusted Business Activity Index dipped to 50.9 last month, down from 51.5 in June, signalling only marginal growth and marking the third softest increase since March 2021.
AIB chief economist David McNamara said data for July shows a further easing in growth in the sector.
“This marks the slowest pace of growth since January 2024, driven by softer output, new business and hiring activity,” he said.
Only three out of the four monitored sub-sectors recorded growth in July. Technology, media and telecoms (TMT) led the pack with a reading of 52.2, though its pace of expansion has also slowed significantly.
Business services and financial services both posted modest growth at 51.6, while transport, tourism and leisure declined for the fifth month in a row, with a score of 47.0, pointing to contraction.
International demand offered only a slight reprieve, with export trading improving marginally, recovering from June’s contraction, but remained weak overall.
Despite sluggish sales, employment in the sector edged up for a sixth straight month, although hiring momentum faded, with job growth the weakest in that period and below the long-term average.
Cost pressures showed signs of easing, offering some relief to service providers. Input price inflation was the joint-lowest in over four years, with TMT firms reporting the softest cost pressures during the latest period while transport, tourism and leisure reporting the strongest.
Prices charged by companies rose at the same modest rate as June, with it is still the lowest in over four years, reflecting competitive pricing in a subdued market.
Sentiment among Irish services remained firm. “Despite weak current activity level, firms in the Irish services sector remained optimistic on the prospect of improved business in the coming 12 months,” Mr McNamara said.
This optimism is driven by expectation of future infrastructure-related investments, though with caution due to the instability in today’s markets.
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