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Firms are hit hard as new work drying up

The pipeline of new work for Northern Irish firms has declined at the steepest rate in 16 months, a major survey said today.

Ulster Bank's bellwether purchasing managers' index (PMI) said May was another month of reduced activity across all areas of the private sector.

Overall, the business activity index slumped from 45.4 to 40.9, and jobs were cut for the sixth month in a row.

Chief economist Richard Ramsey said all sectors experienced "marked deterioration" in output with more of the same to come.

"The forward looking new orders index fell sharply to its lowest level in 16 months.

"Twice as many firms reported a drop in new orders in May as those who reported a rise.

"This suggests that further declines in business output can be expected in the months ahead.

"Whilst lack of demand remains the primary problem, this is closely followed by profitability."

And Northern Ireland remained the sick man of the British Isles, with firms in the PMI reporting that output fell sharply - compared to growth at UK-level.

Job cuts were recorded in all sectors but construction reported the sharpest rate of decline.

Spanboard, a chipboard manufacturer in Coleraine, has said it is at risk of closure with the loss of 19 jobs due to falling orders.

But Mr Ramsey said the domestic front accounted for most of the problems revealed in the PMI.

"While external factors, notably the slowdown in global trade, are having a negative impact on the local economy, the key source of weakness is domestically driven.

"The fastest rates of decline in business activity and new orders are occurring within services, retail and construction.

"These are the least exposed to external economic developments and the most exposed to consumer spending, property market and public expenditure cuts."

But he said some "innovative and robust companies" were recording new orders.

Mr Ramsey added that Northern Ireland's gloom was being replicated around the world.