Belfast Telegraph

Private sector hit by rapid decline

Private-sector business in Northern Ireland continued to suffer last month with activity dropping at the fastest rate in almost two years, a survey of companies has claimed.

Staff numbers continued to fall, mostly due to redundancies, and cost inflation hit a 26-month high, according to December data from the Ulster Bank Northern Ireland purchasing managers' index (PMI).

Business was ravaged by the effects of the freezing weather -but Scotland was hit worst of all, and replaced Northern Ireland at the bottom of the regional performance table for the first time since February 2009.

The new survey saw the business activity index falling from 42.4 to 40.2 in December, comparable to figures for April 2009.

The latest decline means the private sector has been shrinking for 13 months and firms have pinpointed lack of demand from key trading partners south of the border as one of the reasons why.

Manufacturing in Northern Ireland remained in decline, even though orders were up in the UK and Republic. But Ulster Bank chief economist Richard Ramsey said that could be due to the province's reliance on the Republic.

"New export business (across all sectors) has been contracting continuously since January 2008 and firms have frequently cited lack of demand in the Republic of Ireland - Northern Ireland's second most important trading partner after Great Britain - as a factor."

He said that overall, the pace of decline revealed in the survey "should be treated with some caution". "The extreme weather conditions that prevailed last month have undoubtedly exaggerated the true underlying business performance within Northern Ireland. All UK regions, to a greater or less degree, have been affected by the weather."

Mr Ramsey said December continued to see falling job levels though the rate of cuts had eased.

"Firms continue to report falling employment levels as they have done continuously since March 2008. However, the pace of job losses eased in the latest quarter relative to the previous quarter.

"This was due to the services and manufacturing sectors as construction saw the pace of job losses accelerate in December at its sharpest rate since March 2009."

Northern Ireland was one of only three UK regions to signal job losses both in December and in the fourth quarter of 2010.