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Northern Ireland suffers steepest business decline in UK during coronavirus crisis

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The construction industry is one the sectors most deeply affected by the coronavirus pandemic

The construction industry is one the sectors most deeply affected by the coronavirus pandemic

The construction industry is one the sectors most deeply affected by the coronavirus pandemic

Business activity in Northern Ireland saw further steep declines as the private sector remained in deep downturn.

All parts of the economy - construction, retail, services and manufacturing - were in a slump.

According to the Ulster Bank purchasing managers’ index (PMI) the rates of reductions were softer than in April as lockdown started to ease.

But they were still sharper than anything experienced before the present crisis, and declines were worse than in the rest of the UK.

However, Ulster Bank chief economist Richard Ramsey suggested that businesses may be harbouring too much pessimism about the future.

Finance Minister Conor Murphy has said Northern Ireland faces a “very severe” recession - and some have predicted an unemployment rate of 12%.

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Finance Minister Conor Murphy

Finance Minister Conor Murphy

Finance Minister Conor Murphy

Mr Ramsey said the private sector had seen some easing of the declines in output, orders and employment seen in April.

“However, these improvements were relatively modest and perhaps weaker than anticipated.

“Indeed, firms reported their second lowest readings on record for business activity and new orders. And once again, Northern Ireland recorded the fastest rates of decline in output of the 12 UK regions.”

He said job losses here had not been as steep as in other parts of the UK - but that they were still more severe than during the worst of the last financial crisis.

It is estimated that around 200,000 people in Northern Ireland are on the government’s job retention scheme, which runs out in October.

Mr Ramsey said the scheme was preventing widespread redundancies “for now”.

He said all parts of the economy had seen big drops in output and order books in May, though manufacturing and retail were slightly better than services and construction. Services is an economic category covering a range of businesses from restaurants to estate agents.

But he added: “On a more encouraging note, some 15% of manufacturing firms reported a rise in output in May relative to the previous month.

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Richard Ramsey

Richard Ramsey

Richard Ramsey

“However, these firms were outnumbered more than four-to-one by those indicating a decline in activity.

“Services firms are faring less well than manufacturing, with just 1 in 20 reporting an increase in activity in May.

“Meanwhile almost three-quarters of firms within the services industry reported a fall in activity last month, down from 90% in April.”

Northern Ireland businesspeople were also the most pessimistic in the UK about the future, Mr Ramsey said.

Firms here expected output to be even lower than it is today by this time next year.

“This is likely to be influenced by the fact that coronavirus containment measures here are being unwound at a slower rate here than in the UK, combined with our higher dependence on retail and hospitality sectors, and the fact that, coronavirus aside, there is much uncertainty about a potential no-deal Brexit.

“However, while local firms’ doubt surrounding a ‘V-shaped’ recovery is warranted, the scale of their pessimism concerning the 12-month outlook appears excessive.”



Belfast Telegraph