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Slower fall in business activity and staff level rise hints at stabilisation for Northern Ireland economy

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Here, the headline seasonally adjusted Business Activity Index sat at 46.8 in January, up from 44.2 in December (stock photo)

Here, the headline seasonally adjusted Business Activity Index sat at 46.8 in January, up from 44.2 in December (stock photo)

Here, the headline seasonally adjusted Business Activity Index sat at 46.8 in January, up from 44.2 in December (stock photo)

New results for orders and output in the private business sector here last month show signs of stabilisation with "near-term certainty" manifesting confidence.

According to data from the Ulster Bank Northern Ireland PMI, produced by the IHS Markit, the Northern Ireland private sector's business activity fell at a softer pace in January with firms raising their staffing levels for the second month running. Business confidence was at its highest in almost two years. The main findings in the survey pointed towards a softening decline and more promising future.

PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month, while a PMI reading under 50 represents contraction, and a reading at 50 indicates no change.

Here, the headline seasonally adjusted Business Activity Index sat at 46.8 in January, up from 44.2 in December.

That fall was the softest since March 2019.

Analysing the results, Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said: "Brexit and political uncertainty blighted the UK private sector in December, resulting in only one region, London, managing to record growth in output.

"January was a different story though, with nine of the 12 regions posting an increase in business activity last month and only one recording a fall in employment. Clearly the decisive General Election result and the passing of the Withdrawal Bill in Parliament provided a much-needed boost to business confidence.

"Unfortunately, Northern Ireland wasn't one of the nine UK regions to record business activity growth last month.

"However, the rate of decline did ease. And following 12 months of contraction, the fall in new orders appears to have bottomed out. This reflects, a notable pick-up in domestic demand, but concerningly the export orders slump continues.

"Despite the overall weak demand in Northern Ireland's private sector, the pace of hiring has picked up, driven by the services and construction sector. The services sector's improvement can also be seen in a return to growth in new orders."

Mr Ramsey said the restoration of the Executive has contributed to a boost in sentiment, with all sectors here anticipating growth in business activity in a year's time.

He said: "Construction firms are their most optimistic about the year ahead than at any time since the series began in March 2017. What is of course key though is the extent to which this increasing business confidence translates into rising business activity."

He said Brexit uncertainty was cited as the main factor behind a decline in business from abroad.

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