Services sector contracts in September

The services sector contracted for the first time in six months, with September data showing the impact of the slowdown in the wider Irish economy.

A fall in new orders, particularly in the domestic market, led to a fall in the NCB services Purchasing Managers' Index from 52.9 in August to 48.8 in September. The 50 mark separates expansion from contraction.

"Anecdotal evidence suggested that the fall in activity partly reflected a drop in new order levels amid a slowdown in the wider economy," the report said. "There were also reports that outstanding business had been depleted in an attempt to support activity."

New business fell as uncertainty led to delays in purchasing decisions, with the seasonally adjusted index at 48.8 for the month. However, new export orders rose in September, and the rate of growth remained solid.

Business sentiment remained positive, but at 66.0, the level of sentiment was the weakest recorded since April.

Employment continued to fall in the sector, but the survey said the rate was “fractional” and was the weakest for more than two years.

Input prices were also down, with the index falling to 47.2 from 48.5 a month earlier, recording the fastest pace of decline in three months. Respondents said falling wage costs were a factor in extending the trend to 21 months.