Belfast Telegraph

All parts of Northern Ireland economy sank into doldrums during May

All sectors in the Northern Ireland economy are seeing a decline in activity for the first time in six years as a global slowdown takes hold, according to a report today. (stock photo)
All sectors in the Northern Ireland economy are seeing a decline in activity for the first time in six years as a global slowdown takes hold, according to a report today. (stock photo)
Margaret Canning

By Margaret Canning

All sectors in the Northern Ireland economy are seeing a decline in activity for the first time in six years as a global slowdown takes hold, according to a report today.

And Brexit uncertainty was also a factor as construction, retail, services and manufacturing all suffered a slump in new orders and hiring during May, according to the Ulster Bank purchasing managers' index (PMI).

Brexit had also left Northern Ireland firms the least optimistic in the UK.

Ulster Bank said May had been the third month in a row of declining business activity, though the decline was slightly below April's rate.

The bank said: "According to respondents, Brexit uncertainty was the main factor leading output to decline, while there were again mentions of the negative impact of the lack of government at Stormont."

Ulster Bank chief economist Richard Ramsey said the results suggested that a global slowdown, which had affected other economies, was now evident in Northern Ireland.

Figures last week showed a sharp fall in German output and exports during April, while the European Central Bank has also expressed concern about growth in the eurozone.

Mr Ramsey said: "Brexit stockpiling by manufacturing companies had been inflating the performance of local firms in recent months. Now that the rapid phase of stockpiling activity has passed, the latest PMI data reflects the reality of current demand.

"This is weakening in both the domestic and overseas markets, with output at a 76-month low and orders falling at an 81-month low.

"It's not just manufacturing that is weakening; all four sectors saw falling output for the first time in six years. Respondents in the retail sector pointed to sales activity falling at the fastest rate since May 2012 and retailers are scaling back their employment activity as a result."

Companies were not replacing staff who had left. But Mr Ramsey said, although staff numbers were falling, the reductions were being made after record highs in employment, with the labour market still "relatively strong".

But the economist predicted the present economic weakness would continue.

Construction firms had been reporting falling orders for nine months in a row, while every month in 2019 so far had brought falling retail orders. Both the fall in new orders and the continued uncertainty over Brexit were leading companies to work through backlogs of work.

On a more positive front, businesses were less pessimistic than before. Ulster Bank said: "Northern Ireland firms expect output to have risen in a year's time. So whilst firms expect challenges in the short-term, citing Brexit as one of the key factors, their expectations for the longer-term are marginally better."

Brexit uncertainty has also affected confidence and growth in the rest of Europe, while the global economy has also been hit by the continued trade dispute between US and China. The US economy also created fewer jobs than anticipated in May.

Belfast Telegraph

Popular