Services sector in decline, says new survey

The services sector in Ireland saw a further substantial contraction in business activity, according to a new report published this morning.

February data from the NCB Purchasing Managers’ Index signalled a further considerable decline in activity as the wider economic downturn continued to impact negatively on new business levels, as more than half of respondents noted lower activity during the month, against less than 14% that saw a rise.

For the fifth month in a row, Irish service providers were pessimistic regarding future prospects for business activity, as confidence fell from 44.7 to 44.6 on the index.

More than 52% of respondents noted lower new orders in February, which they largely attributed to continued uncertainty among clients. Less than 17% signalled an increase.

New business from overseas fell at a series-record pace over the month, from 38.2 to 34.9 on the index, extending the current period of falling new export orders to 14 months.

Lower activity requirements was the principal factor behind a further fall in employment, as the survey saw a 12th successive reduction in staffing levels.

Profit margins have declined continuously since January 2008. Moreover, the latest fall was the sharpest since profits data were first collected in May 2006.

The index covers all private sector services in Ireland, excluding retail and wholesale, derived from questionnaires sent to a representative panel of around 600 regularly participating companies.