Services decline is slowest since recession began
THE services sector showed a further small decline last month, dragged down by the weak domestic economy, but the fall was the smallest since the recession began more than two years ago.
These results from the NCB Stockbrokers survey of purchasing managers compare with the first recovery in manufacturing output in a similar survey published last week.
But the differences are small, with the services index showing a reading of 49.6, where any figure above 50 represents growth. The manufacturing index came in at 53.
The numbers suggest both sectors have stabilised, but both reflect the general consensus on the Irish economy -- that growth will be led by exports but domestic spending will lag.
Firms continue to cut jobs and wages as competition forces down prices. The survey points to strong deflationary forces in the industry. The reading for input prices was just 42.4, while that for the tourism and travel industry was just 38 -- representing continued heavy price falls. March was the 25th month to record job losses in the sector.
The pace of job losses accelerated in March, although the ICT sector reported an increase for the first month since October.
The overall index was pulled down by significant job-shedding in business services and tourism and travel.
The survey showed new export orders rising for the seventh month in a row. Some estimates suggest services exports are now larger than those of goods. The Economic and Social Research Institute says services exports will have to lead any economic recovery.
The rate of expansion in exports is modest, with a reading of 52.4. It accelerated for the second month running, but exports grew faster last autumn, according to the survey.
"Higher new export orders largely reflected strengthening global demand, while there were some reports that improved marketing strategies had helped to secure new business," said Brian Devine, chief economist at NCB.
"A number of panellists noted increased new business from the UK. Around one-quarter of respondents highlighted a rise in new export orders in March, compared with approximately 17pc who reported a decline, which is encouraging."