Activity in the country's services industry continued to slow in February, although the rate of contraction eased to its weakest in a run of 25 months of declines.
The NCB Services Purchasing Managers Index rose to 48.8 in February from 44.4 in January. Any figures below 50 signals contraction in the industry.
NCB said that intense competition led to further falls in output prices, with costs falling at the fastest pace in three months in February. Lower salary payments were the main factor behind a drop in input costs last month, while competition among suppliers also enabled companies to negotiate discounts.
Today's survey reveals that Irish service providers expect business activity to be higher in 12 months time, with companies predicting an improvement in economic conditions and therefore an increase in confidence.
It also says that clients remained reluctant to commit to new projects and new orders fell further last month, albeit at a weaker pace than in January.
It noted that the fall in total new business was recorded despite another increase in new export orders, which were boosted by strengthening demand from the UK. New business from abroad has now risen every month since September.
As has been evident in the last two years, employment fell at service providers last month. The rate of job cuts actually accelerated during the month as firms adjusted their workforces to deal with the reduced workloads.
'The services PMI rebounded vigourously in February after a disappointing reading in January, but still remains below the 50 mark, signalling ongoing contraction,' commented Brian Devine, economist at NCB Stockbrokers.
'The survey provided further evidence that deflation is ongoing in the economy with input costs falling for the 14th month in a row,' he added.
