IRELAND’S SERVICES sector shrank by its fastest rate in six months in January, according to the latest NCB Purchasing Managers’ Index.
The index fell to 44.4 from 48.3 in December, when it had reached a level last equalled in February 2008 and begun to close on the 50 mark that separates growth from contraction. The sub-index measuring new business slipped to 45.5 from 48.7 the previous month, retreating to its lowest level since September last year.
“Worryingly, the level of new orders fell back sharply, highlighting that this was more than just weather-related problems,” said Brian Devine, economist at NCB Stockbrokers, on the services PMI data. “The latest data highlight how fragile domestic demand is in the Irish economy.”
Markit, which compiles the data, said anecdotal evidence suggested poor economic conditions were largely responsible for the latest fall in the headline figure.
However, despite most sub-indexes continuing to contract in January, new export orders increased for the fifth successive month, albeit at a slower rate.
Separately, new Eurostat figures show that euro zone retail sales were flat in December despite it traditionally being one of the busiest months. In the EU as a whole, retail sales fell by 0.1 per cent during the month.
In December, food, drink and tobacco sales rose 0.3 per cent in both the euro zone and the EU27. However, sales in the non-food sector dropped by 0.2 per cent and 0.3 per cent respectively.
The largest increases in sales were recorded in Austria, France, Spain, Slovenia and Slovakia, while the biggest declines were in Romania, Malta and Portugal.
On a year-on-year basis, sales fell by 1.6 per cent in the euro zone and by 1 per cent in the EU27.
The average volume of trade was down by 2.3 per cent and 1.7 per cent respectively.
Over the year, food, drinks and tobacco sales gained 0.1 per cent in the euro zone and 0.6 per cent in the EU27. However, in the non-food sector, sales fell 2.2 per cent and 1.4 per cent respectively.
The highest increases in annual sales were recorded in Poland, Sweden and Austria, with the largest decreases in Latvia, Lithuania and Estonia. – (Additional reporting: Reuters)
