Few signs of hope as surveys show no private growth
The Northern Ireland economy continues to contract and trails behind the rest of the UK, according to two influential reports.
Northern Bank's Quarterly Sectoral Forecast revealed a contraction of 0.2% in the third quarter of the year while Ulster Bank's PMI report, which surveys Northern Ireland companies, showed activity in the private sector fell for a seventh consecutive month.
Ulster Bank said the services and construction industries were hardest hit, with employment in both also falling sharply.
That will worry the beleaguered building sector which has since added 190 further job losses at Patton Group.
The latest contraction means the Northern Ireland private sector is approaching its fifth year of no recorded growth.
During two months of that period, November 2009 and November 2011, private sector activity remained flat but in every other month since November 2007 it recorded a decline in activity.
Northern Bank economist Angela McGowan said the Northern Ireland economy will contract by 1% during 2012 as a whole but she expected it to return to modest growth, of 0.9% in 2013.
She said both the production and service sectors have struggled in the third quarter.
"The impact of a slump in investment, fragile business confidence and tighter credit conditions during the summer months have taken their toll on the local economy, as well as the UK's austerity drive," she said. "Last week's announcement by the Executive of a £200m economy and jobs initiative is therefore a much needed boost for small and medium sized enterprises, the construction sector and the unemployed and should be warmly welcomed."
Ulster Bank's PMI report showed new business orders fell sharply in October compared to modest growth across the UK as a whole with Northern Ireland companies reporting falling product demand and growing competition. The cost of inputs rose last month as a result of higher fuel costs but on the other side of the coin firms here continued to lower their output prices.
On the upside, manufacturing firms are reporting an increase in new orders, compared with a decline for the UK overall, and are managing to increase prices charged on their goods for the first time in three months.
"This latest feedback from the Northern Ireland business community on private sector conditions confirms the significant challenge facing policy-makers and the local economy," Ulster Bank chief economist Richard Ramsey said.
Northern Bank said growth forecasts suggest that some smaller sectors have managed to hold their heads above water.
For example, the electricity and gas, arts and entertainment, and water and waste management are forecast to experience growth rates of 4.1%, 2% and 1.7% respectively over the course of this year.
But these sectors represent only 4.5% of the local economy.