Ireland's services sector shed jobs at the fastest rate in more than 8 years in December with companies reporting a deep pessimism about the year ahead as they struggled with the weak global economy and strong euro.
The NCB Purchasing Managers' Index (PMI) survey of services companies - ranging from banks to transport firms - ended the year at 34.1, marginally higher than November's record low of 32.6. Any reading below 50 indicates contraction.
Jobs were lost in the sector at the fastest rate on record last month and December was also the seventh successive month of series-record declines in employment.
The measure of employment showed services jobs being cut at the fastest pace in December since data started being collected over eight years ago, falling to 33.4 from 36.8 in the previous month.
Survey respondents said the job loses were mainly due to falling demand and some companies have reduced the working week. Almost 40 per cent of respondents said they had laid-off staff in December.
Brian Devine, economist at NCB Stockbrokers, said today that Ireland was the only country to record a slight improvement in its December services PMI but suggested this could have been due to the fact that "November was extremely bleak".
He said each of the four broad services sectors; business, financial, technology media and telecoms (TMT), and travel & tourism measured by the survey reported a fall in activity in December, although the rates of decline varied sharply.
The travel, tourism and leisure sector had suffered the steepest activity decline due to a strong euro and weak domestic demand.
Financial companies also recorded sharp declines in activity. However, the TMT sector saw activity decline at a much slower rate, according to Markit, which compiles the survey of about 600 Irish companies.
The euro's strength against sterling and falling oil prices last month helped to hold down input prices, which rose only marginally in December.
Last month also saw the second-fastest decline in new export orders with companies reporting an overall fall in demand and, specifically, that the strength of the euro against sterling meant new orders were being lost to British-based firms.
Across the euro zone the private sector services economy shrank sharply in December as firms cut jobs due to slowing demand. The Eurozone PMI index fell to 42.1 in December from 42.5 in November, which coupled with a fall in euro zone inflation, increased expectations the European Central Bank is likely to cut interest rates next week.
In the US the services sector contracted less severely than expected in December with a reading of
40.6 compared with November's 37.3.
This sector represents about 80 per cent of US economic activity, including businesses such as banks, airlines, hotels and restaurants.
Additional reporting Reuters
