Growth rate slows on weaker consumer sentiment
Published 06/05/2011 | 05:00
The rate of growth in the country's services sector slowed for the second month in a row in April which, when combined with a fall in retail sales, paints a worrying picture for consumer demand in the economy.
The NCB Services Purchasing Managers Index for April fell to 50.2 from 51.1 the previous month as a result of the fragile economic conditions.
Any figure above 50 signals growth in the sector.
Activity in the services sector expanded fractionally in April, and NCB Services says it is more pessimistic than the consensus economic forecasts for this year and is predicting that economic growth, as measured by GNP is to decline by 1.4pc, mainly due to a 2.2pc fall in domestic spending.
It notes one clear positive that may temper its pessimism, saying that service providers increased their staffing levels for the first time since February 2008.
"There may be some stabilisation in employment in the economy, but the clear implication from the retail sales data and the services PMI is that consumers and business are continuing to maintain high savings rates.
"If, however, the stabilisation in employment is the start of a trend, this signals an important turning point that will ultimately lead to more spending in the economy."
The survey covers all private sector services in Ireland except the retail and wholesale areas.
It found that companies remained optimistic that activity will be higher than the current low levels in 12 months time, mainly reflecting expectations of improving economic conditions and growth in demand from export markets.
It also notes a fall in financial services activity, which was the steepest since January 2010.
Business activity at technology, media and telecoms companies expanded modestly, while activity in the transport and leisure sector rose slightly.