Fall in services sector activity
While business confidence levels remained low, compared to previous high levels, they were improved in August, compared to July — that section of the index rising from 52.8 to 56.7.
New business levels were largely unchanged at 38.3, but employment levels — across the board — showed a sharp decline in the month, falling from 45.6 to 42.2.
August was the sixth consecutive month of employment declines in the services sector and continued largely on the back of companies being forced to make people redundant as the economy slowed and not looking to replace them.
Commenting on the latest survey, NCB Stockbrokers economist, Brian Devine, said: “The slowdown in the services sector continued in August, with the index reaching a series low.
“New orders contracted at a sharp pace in response to the slowdown in construction and the credit crunch and employment contracted for the sixth month, as firms sought to cut costs in the face of weaker activity.
“Input costs increased at their weakest pace since February.”
“The degree of confidence among service providers improved on July’s survey low, but remained subdued by historical standards.
“Positive sentiment has been at a lower level on only two other occasions in the survey’s history and optimism continued to be adversely affected by fears regarding the health of the Irish economy,” he added.
Overall profitability among businesses in the sector declined sharply in August, too. Rising input costs contributed to reduced margins and the eighth consecutive month of profit decline was also stoked by falling revenues and lower charges.
