Employment tumbled at record pace in services sector last month

JOBS in the services sector were shed at a record pace last month as lower activity forced almost half of employers to reduce staffing levels.

The latest NCB services purchasing managers index (PMI) also found the fall in profitability in the sector in January was the steepest since profits data were first collected two years ago.

According to panellists, this was due to a combination of output price cuts and falling sales.

The index showed 40% of services sector employers cut staff last month, compared with less than 3% that reported an increase.

NCB economist Brian Devine said: “With little to stop the pace of job losses continuing, the standardised unemployment rate which currently stands at 8.3% will breach 10% in the first half of 2009.”

Severe contractions in activity and new business were also recorded while confidence remained low.

The pace of contraction accelerated to its second fastest in the history of the survey and for the fourth successive month while Irish service providers were pessimistic regarding future activity levels.

The outlook in January was more negative than that recorded in December, with panellists largely expecting the economic downturn to worsen during 2009.

The January fall in new business was the third sharpest in the series history and extended the current period of contraction to 12 months. Respondents noted that clients were cautious when making purchasing decisions due to the current economic climate.

The global economic downturn also impacted negatively on new business from abroad as it fell for the 13th successive month.

Input prices fell sharply thanks to the relative weakness of sterling.