Brexit hits Northern Ireland growth as jobs cut for first time in four years
Brexit uncertainty is hitting the economy as growth in business activity slows down and companies cut staff for the first time in four years, according to a report today.
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The Ulster Bank Northern Ireland purchasing managers index said business had been in subdued mood last month - a mood that was likely to linger.
While business activity was up in January, it had grown at the lowest rate for well over two years, while January was the second month in a row in which growth had slowed down.
And Ulster Bank chief economist Richard Ramsey said this year may also see a sustained fall in jobs, after a peak in the market in 2018. June last year witnessed a record high, with 556,250 private sector jobs. But this year, the services sector, which covers everything from estate agents to restaurants, was leading the way in job losses.
While the construction, services and manufacturing sectors all recorded output growth, expansion was slowing down. And the retail sector had contracted, which Mr Ramsey said signalled waning consumer confidence.
The economist said: "Throughout 2018 the theme was one of ever slowing growth, with quarter four the weakest quarter in nine. This trend has continued into 2019, with January seeing private sector growth at a 28-month low.
"Looking at the order books of firms, which have been broadly flat for the past two months, suggests that subdued growth might be with us for some time.
"One of the most significant findings of the latest survey relates to employment. Whilst 2018 was characterised by a buoyant labour market, a record high in private sector jobs, and growing skills shortages, we are now perhaps at a turning point.
"The survey reports staffing levels fell for the first time in four years. Indeed, the employment index dropped to a 67-month low. Losses in the services sector are the primary driver of this emerging weakness."
Retail had experienced the worst month during January, though growth in services anaemic, and manufacturing growth had tailed off.
"When it comes to retail, it appears that consumer confidence is waning fast, with both retail sales and orders falling at a rapid rate. Indeed, retailers' sales expectations for a year ahead hit a new low," Mr Ramsay said.
But he said that the relatively weakened state of the private sector was "not surprising".
"Of concern perhaps is that the fact that both of our key external markets - the rest of the UK and the Republic - are also seeing slower rates of growth, with the UK economy actually approaching stall-speed," he said.
"As the Governor of the Bank of England recently highlighted, this year could be the weakest rate of growth that the UK experiences in over a decade."
Today's purchasing managers' index follows a gloomy forecast on the economy from business advisors EY. Its Economic Eye forecast growth of 0.9% in 2019 and 1.2% in 2020 if there is a Brexit deal. But it predicts that in the event of a no-deal Brexit, the economy would fall into recession, with 11,400 job losses in 2020 alone.