Challenges remain as business activity in Northern Ireland ends the decade on low
Northern Ireland's business activity at the end of 2019 showed a year of underperformance with output and orders in December at 2010 levels, according to a report today.
Ulster Bank's monthly PMI, produced by IHS Markit, shows that there were further reductions in output and new orders in December 2019 with construction and retail hit hardest.
However, December's statistics signalled a softer pace of decline than in the previous month, with the business activity index rising 44.2 in December from 42.3 in November.
However, output was markedly down with the fastest rate of contraction of all UK regions.
Richard Ramsey, Ulster Bank's NI chief economist, said: "Northern Ireland's private sector ended the decade in the same manner as it began. Like 2010, last year was one of decline and underperformance albeit not as stark as the last deep recession.
"Local firms posted the fastest rates of contraction in output and orders of all the UK regions. 2019 was also the weakest year for private sector output, orders and employment growth in seven years. Meanwhile, export orders shrank at their fastest pace since 2011.
"Manufacturing and services firms posted their first annual fall in output since 2012. However, the pace of decline was more marked for both construction and retailers with the latter seeing sales slump to a nine-year low."
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Mr Ramsey said companies continued to report sharp rates of decline in output and orders last month, but there are "some signs" that the four-month decline is easing.
He said: "There has been a notable pick-up in sentiment in Q4. Greater clarity around Brexit and political direction following the general election is a factor.
"All sectors have become more optimistic about the year ahead with retailers the only sector not anticipating growth over the next 12 months.
"Significantly, construction firms expect activity to increase over the next year for the first time in 18 months. December also revealed that staffing levels rose for the first time in 12 months."
Mr Ramsey expects a reduction in prices to squeeze profitability at some firms. He said: "Significant challenges remain and the private sector has started 2020 in a weakened state.
"The lack of a Stormont Executive has been compounding matters, with its absence recently creeping into a fourth year.
"Restoring the institutions has been a political imperative but it is also essential for the economy and delivery of public services."
However, he added that Brexit uncertainty had eased and "extreme pessimism" receded.