THE country's services industry contracted sharply in December after holding up for most of 2011, according to new figures.
The NCB Purchasing Managers' Index (PMI) for the service sector slumped to 48.4 in December, from 52.7 the previous month.
It was the first reading below 50 since the IMF bailout more than a year earlier. A reading above 50 signals expansion while a reading below 50 signals contraction.
Ireland's economy is "clearly double-dipping", Nobel prize-winning economist Nouriel Roubini said on Twitter after the figures were released.
The disappointing figures follow poor readings for the manufacturing sector and the publication of Government exchequer figures on Wednesday that showed that the economy was producing less revenue than expected.
The index for the services sector suggests that business activity in the sector decreased for the first time in December with most businesses blaming the eurozone crisis.
Confidence dipped for the second consecutive month. New business and orders also fell as companies complained of weak client confidence.
NCB economist Brian Devine said further "contraction in the services sector can be expected in early 2012 as the domestic part of the economy remains extremely weak".
Employment was also down as staff were not replaced. There was a chink of light as some services companies reported that they had managed to secure new clients abroad, helping exports.
"Resigning staff were not replaced in a number of cases in December, leading to a further reduction in employment. The eighth successive fall in staffing levels was solid, and sharper than that seen in November," NCB said.
"Once again, the export component within new export orders remained above 50 and ultimately, like for the economy as a whole, this will be sufficient to outweigh the drag from domestic demand in 2012 to ensure a positive GDP number.
"GNP, though, is likely to be flat and employment is likely to decline."
Profits fell in the final quarter of 2011, just as in the final quarter for the previous four years. The latest decrease was faster than that seen in the previous survey period.
The latest figures are further evidence that the economy is cooling rapidly.
Last month, Finance Minister Michael Noonan cut growth projections for the economy in 2012 to 1.3pc from 1.6pc as the euro region debt crisis escalated. That is still too optimistic, according to most independent economists, who believe the economy will probably only grow 1pc this year.