The services sector gathered significant momentum in February, while the business activity, new business and employment metrics of the AIB Ireland services PMI marked two consecutive years of monthly growth.

The headline services business activity index shot up from 54.1 to 58.2 last month, with any reading above 50.0 indicating an improvement in conditions.

"The AIB Irish Services PMI posted a strong increase in February for the third month in a row. The Business Activity Index climbed to 58.2 from 54.1 in January, 52.7 in December and 50.8 in November," said Oliver Mangan, chief economist at AIB.

"This is the highest reading since May and points to a robust rate of growth in services activity in February. It is also well above the flash February Services PMI readings for the Eurozone, UK and US of 53.0, 53.3 and 50.5, respectively."

Faster activity growth was measured in three of the four monitored sectors, led by technology, media and telecoms, while transport, tourism and leisure stabilised following five months of decline.

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Respondents to the survey reported that the latest uplift in activity level was a reflection of firmer demand, with new business rising at the steepest pace since July, and international demand also improved.

The uptick in employment was softer than generally seen in the past two years amid reports of voluntary leavers and candidate sourcing difficulties.

February marked the 24th successive month that work backlogs increased, in part due to increased volumes of new business and staff shortages.

The degree of optimism in market conditions and demand trends was the strongest recorded for a year and historically elevated against the long-term trends.

The rate of input cost inflation continued on its current downward trajectory, reaching its lowest level for 20 months. The pace of output charge inflation rose from January's 16 month low though die to labour expenses and higher operating expenses.

"Inflationary pressures remain strong in the services sector," Mangan said. "Businesses continued to report upward pressure on wages, as well as transport and energy costs, though the rate of increase in input prices eased somewhat further to a 20-month low.

"Meanwhile, higher costs continue to be passed on to customers, with the rate of increase in selling prices re-accelerating in the month."

(Pic: Leah Farrell/RollingNews.ie)