No signs of growth as businesses fail to boost order books
Business activity in Northern Ireland is continuing to fall as order books remain light at home and abroad, according to a major monthly survey today.
The Ulster Bank purchasing managers' index said June was the seventh month of slowdown in a row - but the pace of decline was gentler than May's. But exports were down - mainly due to tough economic conditions, especially in the eurozone.
Firms were also having to slash their prices to stay competitive and the level of discounting was steeper in Northern Ireland than across the UK as a whole.
Ulster Bank chief economist Richard Ramsey said: "The first half of 2012 represented the weakest level of business output since the corresponding six months in 2009. On a quarterly basis, the pace of contraction, both in terms of output and new orders, accelerated in the second quarter relative to the first quarter.
"The ongoing difficulties within the eurozone continue to exert a negative influence on economic and financial conditions elsewhere. This is becoming increasingly evident in the local economy, with exports falling at their fastest rate since September last year."
It wasn't all doom and gloom, however. In common with the consumer price index (CPI) rate of inflation, now down to 2.8%, inflationary pressures on business were also easing.
Mr Ramsey said: "The price of raw materials (eg. oil) and other input costs rose at their weakest rate in June since September 2009. In particular, it is noted that the price of a barrel of Brent Crude oil fell by 22% in June, relative to the month of March.
"Furthermore, the Chancellor's decision to postpone the 3 pence per litre rise in fuel duty, due in August, is to be welcomed.
"However, lack of demand and competition are exerting downward pressure on the fees and charges of local businesses and therefore squeezing profits."
All sectors were feeling the pain, according to the survey, carried out by Markit Economics, with construction hardest hit of all.
But the fact that input prices had grown at a slower rate was the most positive survey finding, according to the bank.
"The index pointed to the weakest rise in average costs since September 2009," the bank said.