A contraction of 30% in new house building - combined with no growth in industry - have resulted in the first reduction in economic output since quarterly records began, according to figures from the Central Statistics Office.
The numbers appear to be the first official confirmation that the economy could heading towards recession with GDP (gross domestic product) already down by 1.5% compared with the first quarter of last year.
Gross national product (GNP) - which excludes profits of foreign-owned companies - rose by 0.8%, mainly because it did not include a drop in profits made by multi-national companies.
The GDP fall was mainly due to an 18.6% drop in capital investment, mainly a result of the slump in house building. Industrial output dropped 5.2%, with the construction component of this area falling 16%, but consumer spending was 3.5% higher than in the same period last year. The contribution from exports was €34m lower.
IBEC economist Fergal O'Brien said 'the most disappointing aspect the figures was the performance of the export sector. He pointed out that, while it was known that goods exports had stalled, it now appeared that services exports were also under pressure.
'Services exports grew only marginally in the first quarter of the year and the trend has slowed dramatically,' he said.
Goodbody economist Dermot O'Leary also pointed to the 'apparent halting' of the upward trend in service exports, and said it would now be hard for the economy to achieve any growth this year. He said Goodbody would be revising its current forecasts for growth of 1.1% in GDP.
Separate final figures from the CSO showed that GDP rose by 6% last year, while GNP growth was 4.1%. Consumer spending rose by 9.4% last year, while Government spending was up more than 10%, the highest in the previous five years.
Other figures showed that there was a deficit of just over €3.6 billion on the current account of the Balance of Payments, which measures trade and investment flows. This was little changed from the same period last year.
