Gloomy outlook for Northern Ireland economy as Brexit looms, says economist
The latest health check on the Northern Ireland economy has painted a grim picture as Brexit uncertainty continues to hang over key industries.
Business activity fell in March for the first time since mid-2016, bringing an end to almost three years of growth, according to the latest Ulster Bank's Purchasing Manager's Index (PMI).
The monthly survey into the state of Northern Ireland's manufacturing, services, retail and construction industries, showed downward trends in every sector apart from manufacturing, where Brexit-linked stockpiling is believed to be the key driver in recent weeks.
The data, based on responses from a panel of 200 private sector companies, also showed falls in exports, new orders and employment. New export business decreased at the fastest rate since May 2013, according to the survey, while the rate of firms cutting jobs quickened to the steepest since April 2013.
Retail sales activity also declined at the sharpest rate for four years during March, while Northern Ireland's largest sector, the service industry, saw activity hit a 32-month low with staffing levels in the sector falling at the fastest rate in almost seven years.
Ulster Bank chief economist Richard Ramsey said while the term 'Brexit uncertainty' has been overused in the past two years, he said the impact of the decision to leave the EU was becoming more and more tangible.
"Business conditions deteriorated further according to respondents, with March seeing the first fall in business activity in 32 months," he said. "Perhaps more significantly though, export orders and employment levels both dropped at their fastest rate in almost six years, and Northern Ireland firms are increasingly pessimistic about the year ahead. Clearly the potential for a no-deal scenario was exercising the minds of business owners last month."
The economist said stockpiling was the likely factor in the growth witnessed in Northern Ireland's manufacturing sector. This is seen in the UK Manufacturing PMI, where stockpiling was reported to be rising at its fastest rate in 27 years."
Mr Ramsey said the March deterioration had resulted in the weakest quarter in terms of economic output since autumn 2016, warning: "More significantly though, employment and exports had their worst quarter since the first half of 2013."
However, the UK is struggling in terms of growth, alongside key economies in Europe, including Germany.
"Northern Ireland though differs from the rest of the UK in that there has been a lack of decision-making on two fronts, with the absence of an Executive adding to the complications created by uncertainty over Brexit," continued Mr Ramsey.
"This has driven a declining picture regarding confidence, with Northern Ireland respondents, particularly in the construction sector, the most pessimistic in the UK regarding future output.
"With the prospect of a no-deal Brexit receding and decisions in relation to some key infrastructure projects now being made in Northern Ireland, it remains to be seen whether some optimism returns in the months ahead."