Bank’s survey adds to gloom
Business activity in the Northern Ireland economy is declining at a faster rate than at any time for the past six years, with a quarter of firms saying they cut jobs in the past month.
Those were the key findings of a survey by Ulster Bank, published today, and they will add to the economic gloom.
And there was further grim news from a BT Business report which suggested almost half of small firms were suffering from a “double whammy” of higher costs and lower returns.
The monthly unemployment figures, out on Wednesday, are expected to show an increase in the number out of work, following last month’s 0.5% hike.
Ulster Bank’s monthly purchasing managers’ index (PMI) report found that employment in the province last month had fallen at the quickest rate since the survey began in 2002, with conditions for private businesses getting worse all round.
Ulster Bank economist Richard Ramsey said the economic slowdown was making itself plainly felt in the job market with falling employment across the UK and in the Republic.
“Turning to Northern Ireland, while two-thirds of firms maintained staffing at current levels, over one quarter reduced their headcount in September,” Mr Ramsey said.
Output and employment in construction bore the brunt of the downturn in the first half of 2008. However, between June and September, manufacturing had the sharpest fall in output and employment, Mr Ramsey said.
But on a positive note he said: “The one piece of good news is the falling price of oil. This has helped to moderate input cost inflation to its lowest level since March this year."
Output in Northern Ireland’s private sector fell for the tenth month running in September, the fastest rate of contraction since the survey started.
Lower business activity in general was down to falling orders in September, the second sharpest fall since the survey began but a less acute fall than last month.
However, the rate of decline in outstanding business in Northern Ireland was faster than the UK average.
Among the companies which took part in the survey, client demand was being stunted by the harsh economic climate, financial market turbulence and the depressed housing market — and companies responded to lighter workloads by reducing staff. This saw employment fall for the seventh month in a row, a spate of job cuts that was the most marked in survey history.
The costs of running a business in Northern Ireland — energy, fuel, raw materials and salaries, for example — were still climbing, though not as quickly as in previous months though the higher costs of doing business are being passed to customers.
The report adds “some panellists signalled that competitive pressures and muted demand had forced them to hold or even cut their charges, and consequently the latest rise in overall output prices was the weakest since March.”
Last month’s report found that Northern Ireland’s private sector contracted more quickly in August than the economies of the Republic and other UK regions. PMIs are monthly surveys of selected companies which monitor the economy by tracking output, new orders, employment and prices across both manufacturing and service sectors.
Meanwhile, in a survey of small businesses by BT, 49% of Northern Ireland said trading conditions were getting worse while 46% said they were losing customers.