The country's services sector shrank in July at the slowest rate for 14 months, a slight improvement from June, with companies optimistic about prospects for a third successive month, a survey shows today.
The NCB Purchasing Managers' Index rose to 42.4 in July from 42.3, the highest level since May 2008.
The survey shows that although the rate of contraction of new business eased to its weakest since May 2008, July's fall was still sharp as firms were still reluctant to commit to expenditure. New orders at services firms have now decreased in each of the past 18 months.
July also saw a fall in employment levels in the services industry, reflecting further adjustments to lower activity requirements. Jobs were also reportedly cut to reduce costs.
Today's survey says that lower wages were a key factor behind the latest fall in input costs at the country's service providers. Input prices fell at the second-fastest pace in the series history last month after June's record decrease.
Output prices also decreased the at the fastest pace in three months, extending the current deflation period to a year.
'The services sector contracted once again in July, but it is worth noting that Irish services providers registered positive sentiment for the third consecutive month in July,' commented Brian Devine, economist at NCB Stockbrokers.
He said that optimism was mainly due to a hope that the Irish economy will begin to recover next year, with the current economic situation proving to be the 'nadir' for activity.
He said the only sector to post a negative outlook in July was transport and leisure as pessimism was recorded for the second month in a row.
