Irish services activity tumbles after new lockdown - PMI

DUBLIN (Reuters) - Ireland's services sector contracted last month at the sharpest rate since the economy was emerging from an initial COVID-19 lockdown last May after the government imposed its toughest restrictions in nine months, a survey showed on Wednesday.

Ireland shut most building sites, shops and the hospitality sector from late December after a four-week reopening led to a huge surge in COVID-19 infections, hospital admissions and deaths. The curbs may be lifted only gradually from March 5.

The AIB IHS Markit Purchasing Managers' Index (PMI) forservices tumbled to 36.2 in January from 50.1 in December. Activity has only fallen at a sharper rate twice on record, in May and April 2020, when the PMI sank to a record low of just 13.9.

Flash surveys last month for the euro zone as a whole and neighbouring Britain showed activity in their services sectors had fallen to similar levels amid widespread restrictions.

AIB Chief Economist Oliver Mangan said the sharp fall in Ireland was not surprising but that there were also some positive signs for future growth.

"More encouraging, employment hardly changed in January despite the lockdown, having expanded in December for the first time since last February," Mangan said.

"Sentiment in regard to the 12-month outlook remained relatively upbeat. Firms believe that the roll out of the vaccine programmes will eliminate the need for further lockdowns and see a return to more normal business conditions as the year progresses."

(Reporting by Padraic Halpin; Editing by Catherine Evans)