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Businesses struggle as volume of new orders still falling

New orders for businesses in Northern Ireland are in their fifth year of decline with exporters finding the going particularly tough, says a monthly survey.

Ulster Bank's bellwether purchasing managers' index by Markit said its measure of business activity fell to 46.2 in December, down from 50 in November.

Its chief economist Richard Ramsey said most of the signs in the index pointed to a "marked deterioration in business conditions".

"New business orders entered a fifth year (49 months) in contraction territory, with export orders falling at a particularly rapid rate.

"As for employment, the December survey signals a rapid and sharp reversal in fortunes after the November survey had reported the sharpest rise in employment levels in four years."

The year had closed "much the way it began," said Mr Ramsey, with a continued contrast between an improving UK economy and stagnation in Northern Ireland.

He added: "Other than two months (including November 2011) when the business output index has recorded 50 (the threshold for expansion/contraction), each month since December 2007 has experienced a fall in output."

The last month showed the steepest fall in head counts for six months, with all four sectors -services, construction, retail and manufacturing - reporting job losses, due mainly to natural wastage and redundancies.

But retailers and manufacturers were in a healthier state than construction and services firms, with 2011 the best year for manufacturing output since 2007.

Mr Ramsey added: "Last month has also proved to be a bumper month for retailing, with the sector recording its best month since late 2007 for both business activity and new orders.

"However, a degree of caution is required here. Last month marked the most intense squeeze in retail profit margins since the survey began [2003]. Bumper sales do not equal bumper profits."

Costs were also rising, with increased energy, raw material and labour-related costs cited by panellists as having driven inflation.