Belfast Telegraph

Services worst hit as slump enters its 50th month

By Margaret Canning

Business activity in the private sector has fallen for the fiftieth month in a row although costs and prices improved, a major survey said.

Ulster Bank's survey of business managers for January showed the pace of decline set in December has continued.

The purchasing managers' index (PMI) found that of construction, services, retail and manufacturing sectors, all but retail recorded a fall in activity.

Managers who responded to the survey said there had been a solid fall in new orders in January, largely due to weak demand.

The rate of decline in new work was the steepest since last September and contrasted with growth in the rest of the UK.

Also in contrast to Britain, the services sector, which includes financial services and restaurants, contracted fastest.

Ulster Bank chief economist Richard Ramsey said: "Some local firms continued to report an improvement in output, exports and employment in the province's latest Ulster Bank Northern Ireland PMI.

"However, overall in the private sector, these firms are still being outnumbered, with more than a third of local companies signalling a decline in business output, and the survey's main index again not crossing the 50 threshold (denoting growth) for the 50th month in succession."

Job losses in participating companies were at their sharpest rate since June with all sectors saying that they were starting the year with fewer staff.

But Mr Ramsey said costs and prices were areas where there were positive signs.

"Input cost inflation, although still strong and significantly above the UK average, eased to its lowest rate in 14 months.

"Meanwhile, the pricing power of local firms improved in January, with the price of goods and services rising at the fastest rate in five months. Manufacturing and retail remain the two sectors passing on cost increases, with price rises in their goods and services."

Retail saw growth in activity and new orders "but profitability remains a key concern within the industry as strong sales do not guarantee robust profits".

The services sector is a key area of concern. Mr Ramsey said: "In Northern Ireland, the sector is contracting at the fastest rate of all sectors in terms of both output and employment."