DUBLIN, April 5 (Reuters) - Ireland's services sector expanded at its slowest pace in three months in March as rising costs and falling prices put pressure on the sector's margins, a survey showed on Tuesday.
The NCB Purchasing Managers' Index, which measures activity in the services sector, slipped to 51.1 from 55.1 in February, but remained above the 50 mark separating growth from contraction for the third month in a row.
"Although business activity at Irish service providers increased again over the month, the rate of expansion was much slower than seen in February," financial information services provider Markit, which compiles the survey, said in a statement.
Growing exports again helped to compensate for a weak domestic market, which has seen demand for services such as information technology and telecoms fall following a property crash, banking collapse and a government austerity drive.
New export orders, which rose slightly in March, have now increased for 18 of the past 19 months.
But the services sector saw its margins squeezed as prices grew at their highest rate in 30 months. The price input sub-index climbed to 59.3 from 55.9 a month earlier, while prices charged to customers continued almost three years of contraction.
Higher fuel prices were described as the main driver of cost growth.
Confidence about future growth remained high, with roughly three times more respondents forecasting activity to be higher in 12 months time than the proportion expecting a contraction. The survey has registered optimism about future growth every month since May 2009.
The survey had bad news on jobs for Ireland's new government, with employment falling at the fastest rate in three months. Employment in the sector has now fallen every month since March 2008.
The data is compiled from questionnaires given to 600 private-sector services companies. (Writing by Conor Humphries; Editing by Carmel Crimmins and Catherine Evans)