Northern Ireland economic output stagnant as new orders drop ahead of Brexit
Brexit fears and uncertainty continue to grow among Northern Ireland businesses as new analysis from Ulster Bank reveals near-stagnation in economic output.
The lender has released its last purchasing managers index (PMI) before the UK is scheduled to leave the EU on March 29. The highly-regarded monthly business monitoring report is considered a health check on the state of the economy.
It showed near-stagnation in economic output in Northern Ireland during February, with total new orders falling for the first time in 28 months.
The survey said Brexit uncertainty was resulting in some customers holding off committing to new projects, resulting in the first dip in new business since October 2016.
It also revealed a sharp drop in new export business, a lowering of staffing levels for the second month running and a prevailing mood of negativity within the business community here.
Northern Ireland is the only UK region where firms expect business output to be lower in 12 months' time, according to the PMI. "Last month was perhaps the point of peak uncertainty and fear regarding a potential 'no-deal exit' from the EU," said Ulster Bank's Chief Economist Richard Ramsey. "This uncertainty is very much reflected in the latest report.
"Private sector firms saw a marked deterioration in business conditions, with output growth almost grinding to halt, employment falling, new orders decreasing, and export orders falling at their fastest pace in 69 months," he said. "In terms of output, private sector growth eased to a 29-month low, with services being the only sector to remain in expansion mode. Manufacturing output stagnated but both construction and retail saw rapid rates of decline."
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The index revealed that retail sales fell at their fastest rate in almost four years during February, a trend that looks set to continue with orders also falling at their fastest rate in 49 months.
Services stood out as the sole sector recording a rise in new orders, although Mr Ramsey called the growth "relatively modest".
He said: "In relation to employment, Northern Ireland was one of nine UK regions to experience a fall in February, driven by the services sector which had until January seen almost two-and-a-half years of growth."
Even among the firms reporting a rise in output, some said the work had been linked to contingencies for Brexit. Others said that the uncertainty had led to falls in activity.
The economist said that while Brexit is clearly a factor in all aspects of the report, other issues remain at play, including the wider economic slowdown across Europe, concerns over global trade, and the ongoing restructuring of the retail sector.