Export orders fall in services sector

THE country’s services sector saw new export orders contract for the first time this year in July, and at the fastest pace in two years, stoking doubts about the country’s economic growth prospects, a survey released yesterday has showed.

The domestic economy is shrinking under a wave of harsh austerity measures, high levels of personal debt and unemployment, and is heavily dependent on exports to achieve the economic growth it needs to meet its targets under an EU-IMF bailout.

The NCB Purchasing Managers’ Index, which measures activity in the services sector, slipped to 51.7 from 52.4 in June, remaining just above the 50 line separating growth from contraction.

But the sub-index measuring new export orders fell to 49.6 from 53.1, registering the sharpest contraction since July 2009.

The last time new orders contracted was in December last year, when the index fell to 49.7.

“The EU debt problems, US debt issues and US growth issues are destabilising not only to the markets but to general business confidence,” said Brian Devine, economist at NCB Stockbrokers.

“Fragile confidence (is) causing clients to delay purchasing decisions,” hesaid.

Overall new business in the services sector fell for the third month in a row.

Increased competition helped trigger the sharpest fall in prices charged for services in 10 months.

Prices have contracted every month for the past three years.

Most of those surveyed said they believed the market would improve over the next 12 months, but the level of optimism remained below the long term average for the series.

The data in the survey was compiled from questionnaires given to 600 private-sector services companies.