Irish services sector at lowest since 9/11 - index

Confidence among firms in the Irish services sector is at its lowest level since the 9/11 terror attacks in the United States, according to the latest Purchasing Managers Index from NCB.

The index produced a December confidence reading of 62.9 which, while still positive, is a sharp fall on the 70.4 recorded in November. Any reading above 50 indicates expansion.

NTC Research, which conducted the survey in association with NCB, said the less optimistic outlook reflected concerns regarding weakness in the construction sector and its likely impact on the wider economy.

Overall, the services sector continued to grow in December, recording a reading of 53.5, up from the 4½-year low of 52.8 in November. The performance of the services sector is in contrast to Irish manufacturing, which earlier this week reported a contraction of activity in December.

Technology, media and telecoms businesses continue to the report the fastest growth and the most confident outlook.

Further afield, eurozone services activity cooled to a two and a half year low in December. However, high inflationary pressures are expected to keep European Central Bank interest rates on hold. The RBS/NTC Euro-zone Services Purchasing Managers Index fell to 53.1 in December from 54.1 in November, down on the 53.2 flash estimate released in the middle of last month and the consensus forecast.

This was its lowest level since June 2005. The pace of growth slipped to a 34-month low in Germany, into contraction in Italy, and barely moved from low levels in Spain. France dipped only slightly from an eight-month high seen in November.

In Britain, activity unexpectedly picked up from a 4½-year low, but price pressures are building rapidly while expectations for future business dived to a six-year low.

The Chartered Institute of Purchasing and Supply/NTC said its purchasing managers' index for services companies, ranging from hotels to banks, rose to 52.4 from 51.9. Economists had forecast the index to weaken further to 51.6

In the US, service industries, which account for almost 90 per cent of the economy, expanded in December at the slowest pace in nine months.

In a sign that the deepening housing recession is limiting growth, the Institute for Supply Management's index of non-manufacturing businesses fell to 53.9 from 54.1 the prior month. - (Additional reporting, Reuters)