Housing starts in November fell by more than half from 3,492 in November 2006 to just 1,539 last month. The figures reported to Homebond, the building industry guarantee scheme, indicate that the number of homes started last month was just one-third of the level in November 2005.

The figures are in line with the trend of recent months, as reported through Homebond, and are now down 46 per cent for the first 11 months of 2007 compared with the same period last year.

Homebond registrations are regarded as a useful barometer of future housing output. There is generally a six-month lag between registrations and property coming on stream.

The slowdown in construction activity meanwhile pushed activity in the services sector to its lowest level in four years last month, according to the latest purchasing managers' index.

Figures from stockbroker NCB indicate that, while the sector is still growing, it slowed markedly last month. The business activity index dipped to 52.8 from 56.5 in October. A figure above 50 indicates growth. The November reading is the lowest for the services sector of the economy since July 2003.

Within the overall figure, the most significant drop in activity was recorded by the financial services sector where activity dropped from 55.3 in October to 51.9 in November. As recently as June, the reading for financial services activity was 61.9.

Dermot O'Brien, chief economist at NCB, said: "While respondents cited weakness in the construction sector as an influence, the fact that activity slowed appreciably in the wider euro-zone services sector in November suggests external influences also contributed to the Irish experience."

It was the ripple effect of the global credit crunch that dragged down performance in the services sector across Europe. Financial services in the Continent's two biggest centres contracted in November. Survey data showed German financial services business shrank for the first time since March 2003 and by the deepest margin in five years, while UK financial services activity contracted for a second consecutive month.

The UK services purchasing managers' data, which were much weaker than expected, ratcheted up the pressure on the Bank of England to cut interest rates today from 5.75 per cent.

Across the euro zone, services growth slipped to a 27-month low. There were stark contrasts between countries, with growth in France leaping to an eight-month high, despite strikes in past weeks, while Italy and Spain eased to near-stagnation.

The RBS/NTC Euro Zone Services Purchasing Managers Index fell to 54.1 in November from 55.8 in October. "The PMI adds to evidence that the financial turmoil is spilling over into the real economy," said Martin Van Vliet at ING.

Growth in the US service sector also slipped in November to its lowest since March.