Ireland’s services sector shrank by its fastest rate in six months in January, when a marked fall in new orders indicated that unusually bad weather was not solely to blame, a survey showed this week.

The NCB Purchasing Managers’ Index fell to 44.4 from 48.3 in December, when it had reached a level last equalled in February 2008 and begun to close in on the 50 mark that separates growth from contraction.

The sub-index measuring new business slipped to 45.5 from 48.7 in the previous month, retreating to its lowest level since September last year.

“Worryingly the level of new orders fell back sharply, highlighting that this was more than just weather-related problems,” said Brian Devine, economist at NCB Stockbrokers, commenting on the services PMI data.

“The latest data highlight how fragile domestic demand is in the Irish economy.”

Markit, which compiles the data, said anecdotal evidence suggested that poor economic conditions were largely responsible for the latest reduction in the headline figure.

However, despite most sub-indexes continuing to contract in January, new export orders increased for the fifth successive month, albeit at the slowest rate in that sequence.

Another PMI survey on Monday showed a similar pattern, with orders from abroad in Ireland’s manufacturing sector accelerating to their highest level since October 2007 although the headline PMI index worsened at a faster month-on-month rate.

“New export orders increasing for the fifth month in a row highlights the dichotomy between the domestic Irish economy and the global economic recovery,” NCB’s Devine added.

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