Sharp fall in profits for services firms

Profits across Irish services companies declined sharply in January, as business activity fell for the second consecutive month.

However, while new business orders dropped again, January saw an easing in the monthly rate of contraction in this regard.

The latest purchasing managers’ index (PMI) for the services sector, published yesterday by NCB Stockbrokers, said last month’s decline in new orders was “marginal” and was symptomatic of the uncertain economic conditions.

There was another increase in new export orders, but there was worse news elsewhere.

“The most notable reading in this month’s PMI is the employment index, which fell from 47.3 to 44.5, the sharpest fall since April 2010,” noted Brian Devine, chief economist at NCB.

“Within our sample, 24% of respondents lowered staffing levels, while only 9% raised them. The only sector with an overall positive employment reading in the month was technology, media and telecoms.”

The rate of job cuts among services firms was the sharpest for 21 months, chiefly down to dwindling workloads. The profit drop, meanwhile, was the sharpest decline since last May.