The Irish services sector contracted for the second month running in May and at a sharper rate than in April, according to a new survey.
The report by NCB stockbrokers said services firms reported the sharpest fall-off in new business since the aftermath of the terrorist attacks on the United States 18 months ago.
Many firms said margins had come under pressure as demand weakens giving buyers greater power. Costs remained high despite signs that inflation was easing, the report said.
Business confidence is also showing signs of weakening as the long-awaited recovery still seems some way off. The business sentiment index shows an increasing number of firms were growing pessimistic about prospects for the services sector over the next 12 months.