Irish service sector companies cut jobs and prices at a record pace last month as the economy slid into recession, a survey showed this morning.
The NCB Irish Purchasing Managers' Index edged up to 40.8 in September from August's record low of 39.8 but remained in contraction, below the 50 mark indicating growth for the eighth month running.
"The contraction in services sector activity is weighing on employment which in turn is weighing further on consumer spending," said NCB Stockbrokers chief economist Brian Devine, adding the intensifying global credit crisis was hurting financial and business services in particular.
The employment index fell to 41.5 in September from 42.2 the previous month, showing companies cutting jobs at the sharpest pace since the survey began in May 2000.
Official data last week showed Ireland became the first euro zone country this year to post two consecutive quarters of economic contraction as the bursting of a decade-long property boom and the global credit crunch batter prospects.
Service sector "charges fell at the fastest rate in the survey's history as companies competed for scarce new business," data compilers Markit said.
The prices charged gauge fell to 46.4 in September from 49.4 in August, suggesting a collapse in demand is making it impossible for companies to pass on higher raw materials costs in the way the European Central Bank feared when it raised interest rates in July.
The index measuring business expectations at 55.1 was at its lowest since July, marking the second weakest month in the survey's history.
"Around one-quarter of firms expect activity to fall, with the economic slowdown in some cases forecast to continue for up to two years," Markit said.
New business remained very weak, although that index edged up to 39.5 from August's record low of 38.3. "Panellists mentioned the lack of available credit as being a cause of the contraction, with investment spending reduced," Markit said.
Meanwhile the global downturn weighed on new export business, which fell for the ninth month running and was also at its lowest since July.
Additional reporting Reuters/agencies