Ireland's services sector contracted at a record pace in February, while business confidence and employment indicators remained close to all-time lows, data showed today.
Business activity measured by the NCB Purchasing Managers' Index survey fell to a record low of 31.8 from 33.9 in January, way below the 50 line where growth starts.
The index measuring expectations for business in 12 months' time hit its second lowest level since the index started in May 2000, falling to 44.6 from 44.7 the previous month. "According to panellists in February, there are no signs of an end to the global economic downturn," said Markit, which compiles the data.
Service companies ranging from aircraft maintenance group SR Technics to Royal Bank of Scotland have announced redundancies in Ireland in recent weeks, with many others joining their ranks from the manufacturing side. The PMI survey showed services firms shed jobs at a pace only slightly slower than January's record rate.
"The fall in employment is causing a negative feedback loop from employment to services sector demand," said Brian Devine, economist at NCB Stockbrokers.
Economists expect Ireland's unemployment this year to hit 12.3 per cent, its highest level since 1995, as a protracted property downturn and global recession push thousands onto the dole, a Reuters poll showed yesterday.
A slew of data last week also painted a bleak picture with a record drop in employment in the last quarter of 2008, an accelerated fall in house prices in January and mortgage lending at a 23-year low.
The PMI survey showed Irish service companies cleared record amounts of backlogs of work in February, with some reporting all backlogs had now been cleared. New business and export business measures hit new series lows as well.
"More than 52 per cent of respondents signalled lower new orders during the month, compared with less than 17 per cent that noted an increase," Markit said.
The deepening recession reduced cost pressures as well, with input costs falling sharply for the second month in a row and output prices declining for the seventh month running.
Reuters