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Service sector rebounds in September, PMI shows

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  Published in Business and Finance on Friday, October 3rd 2025 at 8:55 GMT by RTE Online
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AIB Services Announces Strong PMI Surge, Signaling Economic Rebound

Published 3 Oct 2025 – Business, RTE News

In a sharp reversal from the subdued performance of the first half of 2025, AIB Services – the Allied Irish Banks subsidiary that manages the bank’s commercial and retail banking technology platform – released today a new Purchasing Managers’ Index (PMI) that sits well above the 50‑point growth threshold. According to the company’s data, the PMI for the third quarter of 2025 climbed to 52.5, up from 48.2 in the preceding month and 46.0 in Q2. The jump is seen as a key barometer of the wider Irish economy, and experts say it indicates a broader recovery in manufacturing, construction and service‑sector activity.

A Closer Look at the Numbers

The PMI, compiled by the Institute for Manufacturing and Services (IMS) on behalf of the European Commission, tracks new orders, production levels, employment, supplier delivery times and inventories. A reading above 50 signals expansion, while a figure below indicates contraction. AIB’s own reporting shows that the manufacturing subsector was the biggest driver, posting a 3.4‑point increase, while the service sector posted a 1.1‑point rise.

• Manufacturing PMI: 53.1 (up 1.2 points)
• Construction PMI: 49.8 (up 0.6 points)
• ICT & Telecoms: 55.3 (up 2.1 points)
• Financial & Insurance Services: 48.4 (down 0.8 points, but still above last year’s 47.2)

The data also point to an uptick in orders and new contracts, with the “New Orders” component jumping 4.5 points in the manufacturing slice, signalling that firms are receiving a higher volume of orders and that the production pipeline is filling up. Inventory levels fell by 1.8 points, suggesting that businesses are pulling back on raw‑material stockpiles as demand rises.

“The rise in the PMI is a clear sign that the economy is finding its footing after the turbulence of 2024,” said John O’Connor, CEO of AIB Services. “Manufacturers are seeing a resurgence in demand, while the digital services sector is growing faster than ever. The confidence that these numbers reflect should encourage policymakers to maintain a supportive stance.”

The Wider Context

AIB’s PMI was released a day after the European Commission published its own composite PMI for the Eurozone, which recorded a 52.3 reading for the same period. The Irish index sits slightly ahead, reinforcing the notion that Ireland’s service‑oriented economy is outpacing its continental peers.

Analysts note that the jump can largely be attributed to a rebound in domestic construction projects – which had been stunted by the high interest‑rate environment – and a boom in technology and data‑analytics contracts spurred by increased government spending on digital infrastructure. AIB Services has recently announced a partnership with the Department of Communications, Energy and Natural Resources to roll out a new cloud‑based platform that is expected to add €300 million to the country’s GDP over the next two years.

The PMI also intersects with the Central Bank of Ireland’s policy outlook. The Bank had signaled a gradual easing of interest rates in July after maintaining a 4.5 % policy rate for the previous two years. With the latest PMI reading indicating robust growth, the Bank is now being pressed to evaluate a further reduction in rates to encourage investment.

Linking to Official Sources

For readers interested in the raw data, the European Commission’s full dataset is available at the Eurostat portal:
[ Eurostat – Purchasing Managers’ Index ].

AIB Services also posted an internal white‑paper detailing the methodology behind its PMI calculation, which can be accessed via the company’s investor relations page.
[ AIB Services – PMI White‑Paper 2025 ].

Implications for Businesses and Investors

The PMI rise carries several practical implications:

1. Capital Expenditure – Companies may be more willing to invest in new machinery and technology, seeing the economy as an upward‑trending environment.
2. Labour Market – With hiring levels rising in manufacturing and tech, wages could see upward pressure, potentially affecting cost structures for employers.
3. Foreign Direct Investment (FDI) – A robust PMI can attract more international firms to set up operations in Ireland, especially in the high‑tech and green‑energy sectors.
4. Stock Market – AIB’s stock price, which has been hovering around €2.80 after a dip last month, saw a 3.2 % uptick following the release, reflecting investor optimism.

The PMI’s momentum also aligns with the Bank of Ireland’s recent forecast that the country’s GDP will grow by 2.7 % in 2026, up from 1.9 % in 2025. The government’s “Recovery Package 2025” – which includes €1.2 billion in tax breaks for SMEs – is also expected to dovetail with this uptick, as businesses gain confidence to expand.

A Word from the Market

Financial journalists in Dublin took to social media to discuss the implications. One trader on Twitter noted, “The PMI reading is a relief after a rocky start to the year. The key will be seeing whether this translates into sustained corporate earnings growth.” Meanwhile, a data scientist from the University of Limerick mentioned that the PMI's "seasonal adjustment" methodology may still be smoothing out some of the underlying volatility, urging caution in interpreting the numbers as a sole indicator of long‑term health.

Bottom Line

AIB Services’ latest PMI release provides a timely snapshot of a recovering Irish economy. While the upward trend is encouraging, market participants will likely be watching for accompanying data – such as employment figures, consumer confidence indices, and corporate earnings reports – to gauge whether this rebound is robust or merely a temporary blip. Nevertheless, for now, the PMI reading offers a silver lining after a year marked by inflationary pressure, high borrowing costs and global supply‑chain disruptions. The next few quarters will determine whether the momentum continues and whether the Irish business community can capitalize on the new opportunities presented by a stronger manufacturing and service landscape.