Activity at Irish service providers continued to decrease in December, but the rate of contraction eased to its weakest since February 2008.
The NCB Services Purchasing Managers Index rose to 48.3 in December from 46.8 in November. Any figure below 50 means that activity still fell.
NCB says that falling new business was again the main reason for the lower activity, which has now fallen in each of the past 23 months.
The index reveals that service providers remain optimistic that activity will be higher this time next year, with positive sentiment recorded for the eighth month in a row. Companies also expect the wider economy to improve this year.
New orders fell at a slower pace in December, but companies remained cautious and were reluctant to commit to new expenditure. NCB said the contraction in new orders was seen despite the fourth increase in a row in new business from abroad.
While service providers continued to shed jobs at a substantial pace, the rate of cuts slowed to the weaken in 17 months.
The main reason for the latest drop in input costs at firms was lower wage payments, while output charges also fell for the 17th month in a row. Companies noted increased competition for new business, also well as pressure from clients to offer discounts.
'The services sector contracted once again in December, but the pace of decline continues to moderate. The drag continues to come from the domestic part of the economy as international new orders actually expanded for the fourth month in a row,' commented NCB economist Brian Devine.
'While global recovery is leading Ireland out of recession, we would expect that by the end of the first quarter of 2010 both GDP and GNP will have expanded,' he added.
