Belfast Telegraph

Services sector hit as slump deepens

By David Elliot

Northern Ireland's economy slowed further in August, according to Ulster Bank's PMI report.

The document showed a sharp decline in private sector output here for the 22nd consecutive month, particularly in the manufacturing, services, retail and construction sectors.

The survey, carried out by Markit for the bank, said businesses have been hit hard by a drop-off in demand for their goods and services caused by growing uncertainty in the global economy.

At the same time, costs have risen sharply in response to a jump in the price of raw materials, rising fuel costs and increased wages.

The result is that many companies have been forced to reduce their workforce, although the rate of "job-shedding" has remained relatively low.

"Apart from December's weather-distorted reading, last month's survey represents the sharpest decline in business output since April 2009," Ulster Bank's chief economist for Northern Ireland, Richard Ramsey, said.

"The pace of decline was most pronounced within construction and services (excluding retail) which both contracted at their fastest rates since early 2009.

"Both sectors have readings in the 30s, which signals a severe contraction.

"Local retailers posted their sharpest fall in activity this year, while new orders within the retail sector declined at their fastest rate since March 2009 - when the recession was in its most intense phase."

He confirmed that manufacturing remains the "best performing sector", but acknowledged that it is the most exposed to a global slowdown.

He added: "Indeed, last month, Northern Ireland's manufacturing firms reported that output fell at its fastest rate in 26 months.

"The fact that inflation is rising at its weakest rate this year provides little consolation for a lack of demand across all sectors.

"Given that the Northern Ireland economy is suffering more than any UK region, it needs stimulus more than anywhere else."

22

Number of consecutive months output in the private sector has fallen

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