Economist: UK economic slowdown hitting Ulster hardest
A slowdown in the UK services sector during August is being felt even more keenly in Northern Ireland, an economist has said.
A sluggish performance for the UK's powerhouse services sector - which embraces everything from restaurants to retailers and estate agents - is expected to result in a slowdown in economic growth in Britain in the third quarter.
The latest Markit/CIPS Purchasing Managers' Index (PMI) survey for the services sector, which accounts for more than three-quarters of UK growth, showed a reading of 55.6 last month.
A figure above 50 indicates growth.
Last month's reading is down from 57.4 in July and marks the worst performance since May 2013, driven by a sharp slowdown in new business.
But PwC Northern Ireland chief economist Esmond Birnie said indicators such as the province's own monthly purchasing managers' indices showed that the Northern Ireland economy had been slowing down since towards the end of last year.
And within the services sector, he said the trend of late had been "fairly downbeat", with falling shopping footfall and high vacancy rates.
According to the latest Northern Ireland Retail Consortium/Springboard survey, the Northern Ireland high street shop vacancy rate is 17.3%, compared to 9.8% in the UK.
Mr Birnie said: "It is possible that fears about future austerity and public sector employment reduction are working their way back into depressed spending in the shops."
In addition, he said there was likely to have been a slower pace of foreign direct investment into export-orientated parts of the services sector, such as back office operations and IT.
That slowdown had been inevitable after a record year for FDI during 2014/15, Mr Birnie said.
PwC's economic forecast for Northern Ireland's economy is for growth of 1.8% this year - compared to UK growth of 2.5% for this year - and 1.7% next year.
Markit chief economist Chris Williamson said the services data, combined with PMI surveys from the construction and manufacturing sectors earlier this week, points to weaker growth overall in the economy in the three months to September.
He is forecasting growth of 0.5% in the third quarter, down from 0.7% in the previous three months.
This comes after the Markit/CIPS "all sector" PMI showed its weakest reading since May 2013, at 55.3 in August, down from 56.7 in July.
Mr Williamson said: "The three Markit/CIPS PMI surveys are collectively pointing to the weakest monthly expansion for over two years.
"As such, the economy looks set to grow by 0.5% in the third quarter, down from 0.7% in the three months to June, with the ongoing upturn almost entirely dependent on the service sector, aided by the far smaller construction sector," he added.
Mr Williamson said signs of easing growth in the wider economy, together with waning price pressures for firms, renewed expectations that interest rates will be on hold until the "global economic picture becomes clearer".
Meanwhile, growth in Ireland's services fell in August from July's nine-year high as the pace of new business slowed, according to the Investec Purchasing Managers' Index. The index fell to 62.1 from 63.4 in July and has remained over the 50-point line separating growth from contraction for over three years.