Faltering recovery takes toll on exports in service sector

EXPORT ORDERS in the services sector have fallen for the first time in six months as faltering international confidence takes it toll in Ireland and across Europe.

The NCB Purchasing Managers’ Index, which measures activity in the services sector in Ireland, slipped to 51.7 from 52.4 in June, remaining just above the 50 line dividing growth from contraction.

The separate Markit Eurozone Services Purchasing Managers’ Index fell to 51.6 last month from 53.7 in June. It was revised up slightly from a flash reading of 51.4 but still registered its lowest level since September 2009.

A sub-index measuring new Irish export orders fell to 49.6 from 53.1, registering the sharpest contraction since July 2009.

The last time new orders contracted was in December last year, when the index fell to 49.7.

“The EU debt problems, US debt issues and US growth issues are destabilising not only to the markets but to general business confidence,” said Brian Devine, economist at NCB Stockbrokers.

Overall new business in the services sector fell for the third month in a row.

Although the rate of decline remained only slight at 49.2 compared to 49.6 in June, it was fractionally quicker than that seen in the previous month.

Increased competition helped trigger the sharpest fall in prices charged for services in 10 months.

The index for prices charged was 42.3, the lowest figure since September 2010. Prices have contracted every month for the past three years.

For the third consecutive month, staffing levels at services companies fell at a moderate rate. Apart from a slight rise in April, employment has fallen in each month since March 2008.

Most of those surveyed said they believed the market would improve over the next 12 months.

The data in the survey was compiled from questionnaires given to 600 private-sector services firms.

Growth in the euro zone’s dominant service sector eased to its weakest rate in nearly two years in July as backlogs of work fell for the first time since late last year.

“The growth slowdown in the euro zone service sector . . . is worrisome, with signs of fragility exhibited in all of the nations surveyed,” said Rob Dobson, senior economist at data provider Markit.