Growth in the Irish services sector crawled to a four-and-a-half-year low in January, as new business increased at only a marginal pace following turbulence in the financial services sector and lingering problems in the construction and real estate sectors.

But Irish services companies did better than their counterparts in the euro zone, where growth slowed sharply, stoking fears of a recession.

Activity in three of the four big euro-zone economies - Germany, Spain and Italy - all contracted last month. France's services sector bucked the trend, but the Eurozone Services Purchasing Managers' Index (PMI) still fell a sharp 1.4 points to 50.6, leaving the index dangerously close to the 50 mark that divides growth from contraction.

In the Republic, the sector expanded for the 56th consecutive month, with the business activity index giving a reading of 51.9, but new business has completely dried up in some sectors, according to NCB, which publishes the survey.

Costs rose sharply again in January among the 600 companies surveyed, amid reports of higher staff salaries and fuel prices. But the prices charged by service providers were unchanged, as the higher costs passed on by some firms were cancelled out by competition-led price falls at others.

There was a slight rebound in business confidence, which was attributed to the launch of new services and company expansion plans, but sentiment is still well below average.

Employee numbers at services firms posted a rise last month, but the rate of job creation is close to the four-year low recorded the previous month.

The PMI, which is produced by NTC Research, records the level of services used and provided by services companies, excluding retail and wholesale firms.