As news emerged that the global downturn is hitting new Irish export business - which fell for the ninth month running and was also at its lowest since July - it has been revealed that service sector companies cut jobs and prices at a record pace last month.

"The contraction in services sector activity is weighing on employment which in turn is weighing further on consumer spending," said NCB Stockbrokers Chief Economist Brian Devine, adding that the intensifying global credit crisis was hurting financial and business services in particular.

The employment index fell to 41.5 in September from 42.2 the previous month, showing companies cutting jobs at the sharpest pace since the survey began in May 2000.

At the same time as the economy slid into recession, the survey, the 'NCB Irish Purchasing Managers' Index' has edged up to 40.8 in September from August's record low of 39.8 but remained in contraction, below the 50 mark - indicating bad news for the eighth month running.

The news comes on top of the official data which showed Ireland had become the first euro zone country this year to post two consecutive quarters of economic contraction as the bursting of a decade-long property boom and the global credit crunch batter prospects.

The Central Statistics Office reported last month that gross domestic product (GDP) had contracted by 0.5% in the three months to the end of June, fitting the bill for a true recession.

It is the first time Ireland has experienced a recession since 1983, and although it is early days, few forsee a quick recovery.

It is now the case that service sector "charges fell at the fastest rate in the survey's history as companies competed for scarce new business", data compilers Markit said.

The prices charged gauge fell to 46.4 in September from 49.4 in August, suggesting a collapse in demand is making it impossible for companies to pass on higher raw materials costs in the way the European Central Bank feared when it raised interest rates in July.

The index measuring business expectations at 55.1 was at its lowest since July, marking the second weakest month in the survey's history.

"Around one-quarter of firms expect activity to fall, with the economic slowdown in some cases forecast to continue for up to two years," Markit said.

New business remained very weak, although that index edged up to 39.5 from August's record low of 38.3.

See: It's Official - Ireland Is In Recession

(BMcC)