New figures show that activity in the services sector continued to decline in March, although businesses showed a slightly more positive outlook due to a belief that the economy can not get any worse.
The NCB's Services PMI posted a reading of 35.7 last month, up from 31.8 in February. March's fall was the weakest since October 2008. Companies said that lower new business led to the decline, with some existing projects being suspended or cancelled.
But at 50.8, the gauge of business expectations in the index was just over the 50 mark level indicating a rise in sentiment. It was the first sign of optimism after five months of negative outlook in the NCB Purchasing Managers' Index survey.
New orders fell sharply again in March for the 14th month in a row, due to the wider economic downturn with customers remaining reluctant to commit to new projects.
The pace of job cuts also accelerated in March and was almost equal with the series record fall recorded in January.
Input prices fell at a series-record pace last month. Salary reductions and lower supplier charges were the main sources of lower input costs, NCB suggested.
'It is not a surprise that the services sector continues to contract but it was encouraging to note that confidence actually increased on the month,' commented NCB economist Brian Devine.
He said that the flexibility of the private sector wage force is a positive for Ireland and is a key component for the restoration of Ireland's competitive position.
'Downward flexibility in wages is one factor which distinguishes Ireland from many of its euro area counterparts,' he added.
'Once again the Government is the key determinant of public sector competitiveness - April 7 will reveal a lot about Ireland's future prospects,' he predicted.
