Output and new orders continued to fall last month with Northern Ireland's economy tipped to see economic decline of 15% over the year as a whole, a report said today .
October's purchasing managers' index (PMI) - produced for Ulster Bank by IHS Markit - signalled a stagnation of business activity across the private sector as new orders fell again.
It follows on from a three month period of rising output and is attributed to new restrictions put in place to prevent the spread of Covid-19, including the most recent closure of many businesses in the services sector.
The Business Activity Index posted broadly in line with the 50.0 no-change mark at 49.9 in October. This was down from 51.9 in September. Anything under 50.0 signifies a shrinking of the market.
The report also said that many firms here also continued to scale back staffing levels in October. Meanwhile, rates of inflation of both input costs and output prices quickened.
Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said: "Northern Ireland's private sector ended the third quarter with output expanding at a modest rate. What little momentum there was has been lost during the start of the fourth quarter, with output growth stagnating in October.
"Given the reintroduction of lockdown measures for some sectors during the second half of last month, this deterioration is not unexpected. With new orders posting their third successive decline in October and restrictions to remain in place for at least the first half of November, the prospect of a pick-up in growth anytime soon looks slim. It is noted that Scotland and Wales, who also reintroduced lockdown measures ahead of England, posted even sharper falls in output last month.
"Meanwhile Northern Ireland's largest export market, the Republic of Ireland posted its second successive month of contraction. Subdued demand from the Republic of Ireland is contributing to the continued marked decline in local firms' export orders. Against this background, alongside rising inflationary pressures, local firms are continuing to reduce their staffing levels at a significant rate."
Mr Ramsey said construction was the best performer for the second month in a row, and was the only sector to record both output and orders growth. "Indeed, new orders increased at their fastest rate in 56 months. Clearly this rapid growth has been coming off very low levels of activity. Manufacturing was the only other sector to see a pick-up in new orders growth. Services saw a rapid reversal in fortunes in October with output falling after September's robust rate of expansion. More significantly, services orders slumped which is not surprising given the closure of the hospitality sector and other services firms due to lockdown.
"Manufacturing, services and retail firms all reported significant falls in employment levels while the construction sector posted a modest reduction in headcount.
"The resurgence of the COVID-19 virus and the reintroduction of lockdowns across Europe is expected to see economies contract over the course of the fourth quarter. Northern Ireland is not expected to be any different with the economy set for an annual decline of around 15% for 2020.
"The longer the restrictions remain in place the deeper the contraction will be."