Ireland's services sector contracted for the second month in a row in March after almost five years of expansion, the NCB/NTC Purchasing Managers' Index showed today.
The survey's headline index fell to 48.1, sinking further below the 50 mark that separates growth from contraction. It crossed that line for the first time since May 2003 when it fell to 48.3 in February.
The index has fallen from levels around 65 in mid-2006 as the end of a long-running Irish housing boom combines with a sharp downturn in the US economy to undermine demand for services.
New business fell to its weakest level since just after the September 11th, 2001, attacks on the United States, and amid a global crisis over mortgage debt, the service sector shed more jobs than it created.
"The employment index was down to 2003 levels, weighed upon by embargoes on recruitment in the financial services sector," said Eunan King, senior economist at NCB Stockbrokers. "This is no doubt related to the current problems in the housing and mortgage markets."
The new business index slid to 46.3 from February's 48.1, and the fall in orders left staff clearing backlogs at the fastest pace in almost five years, with the outstanding business index falling to 43.0 from 46.9 the previous month.
Asked about business in 12 months' time, companies remained positive overall.