Posted on Friday 7 June 2019 by John Mulgrew
Northern Ireland’s private sector has suffered its third consecutive month of slowdown and contraction – faring worse than any other UK region.
The startling figures in the latest Ulster Bank purchasing managers’ index (PMI) show that Brexit uncertainty was the main factor in a marked decline in economic activity. Manufacturing, construction and services also saw a reduction in output, while retail fared even worse.
“The fall in Northern Ireland contrasted with a marginal expansion across the UK economy as a whole,” the report said. “For the first time in more than six years, all four monitored sectors saw activity decrease.”
The latest report for April also seems to show a rise in manufacturing output over the last few months could be down to Brexit-related stockpiling.
“What the latest PMI suggests is that the global slowdown which had been impacting other economies is now clearly evident within Northern Ireland,” Ulster Bank chief economist Richard Ramsey said.
“Brexit stockpiling by manufacturing companies had been inflating the performance of local firms in recent months. Now that the rapid phase of stockpiling activity has passed, the latest PMI data reflects the reality of current demand. This is weakening in both the domestic and overseas markets, with output at 76-month low and orders falling at an 81-month low.
“It’s not just manufacturing that is weakening; all four sectors saw falling output for the first time in six years. Respondents in the retail sector pointed to sales activity falling at the fastest rate since May 2012, and retailers are scaling back their employment activity as a result.”
He said “in terms of employment, while private sector firms are continuing to reduce staffing levels, it should be remembered that this is from record employment highs and the labour market remains relatively strong”.
“Notably, despite the current challenges, the level of pessimism amongst respondents regarding the 12-months ahead has eased. Indeed, Northern Ireland firms expect output to have risen in a year’s time. So while firms expect challenges in the short-term – citing Brexit as one of the key factors – their expectations for the longer-term are marginally better.”