The Irish services sector shrank at the slowest pace in some 18 months, with the amount of new business in the sector nearing growth territory, a survey showed today.
The NCB Purchasing Managers' Index rose to 47.4 from 45.5 in September, the closest it has moved to the 50 mark that separates growth from contraction since March 2008.
The sub-index of new business hovered near the 50 mark amid aggressive sales activities and increased foreign demand, although weak economic conditions meant new orders still fell marginally over the month.
The survey showed that new business rose to its strongest since January 2008 when it was last exhibiting growth, jumping to 49.7 from 45.1 last month.
"The rate of expansion in new orders from abroad accelerated to its fastest in two years," said Brian Devine, economist at NCB Stockbrokers. "Anecdotal evidence suggested that increased activity in both the Middle East and Eastern Europe had contributed to the rise in new export business in October."
The researchers noted although there was a further sharp fall in employment during October, the rate of job shedding eased to its weakest in 13 months.
The index measuring prices charged by companies remained almost flat in the month as heavy competition for new business from both domestic and foreign sources continued to drive down charges, according to Markit Economics, which compiles the data from a panel of some 300 companies around the State.
"Domestic activity is likely to remain weak and is largely price dependent. The choice for many retailers appears to be cut prices and lose profit margin, or, maintain prices and lose volume," Mr Devine of NCB added.
Another PMI survey earlier in the week showed Ireland's manufacturing sector edged closer to recovery in October, raising the prospect of the whole economy starting to come out of recession as early as the last quarter of 2009.
Additional reporting Reuters