The index stood at 53.8 in August, up from 53.6 a month earlier. Any reading over 50 indicates an increase in activity.
This rate of growth was faster than the eurozone and UK surveys, but was below the US.
All four of the Irish sub-sectors featured in the analysis recorded higher activity last month, AIB reported.
Technology, media and telecoms was the fastest growing sector in August, while business services also recorded growth across the month.
The transport, tourism and leisure industry saw its first increase in activity in three months last month
Financial services experienced growth in August but was the slowest growing subsector for the first time in almost three years.
This reflected a change in demand from the first six months of the year when it was the fastest-growing industry.
Business in the Irish services sector was driven by stronger demand, with the rate of growth the fastest in three months. Demand in Ireland remained stronger than new business from overseas, AIB reported.
The level of incomplete work for companies in the sector rose again in August to reach the strongest level of outstanding work in almost a year.
As a result, service providers boosted employee numbers in August, with a number of permanent roles created.
The pace of job creation hit a six-month high, although employee numbers in transport, tourism and leisure declined across the month.
The rate of inflation did not change last month as companies continued to grapple with price pressures linked to labour, suppliers, fuel and utilities.
“Firms also continued to raise prices for customers, but the output price index eased significantly to its weakest rate of growth since April 2021,” AIB chief economist David McNamara said.
Despite new business in August, confidence around activity growth in the next year is moderate. Firms said confidence was linked to economic improvements, investments, tourism, new products and sales drives.
“Business sentiment about the prospects for activity over the coming 12 months remained broadly positive, but the index eased to its lowest level, since November 2022, with expectations moderating across most sectors in August.,” Mr McNamara said.