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NI private sector suffers further contraction but pace 'softening'

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Concerns: Richard Ramsey

Concerns: Richard Ramsey

Concerns: Richard Ramsey

The private sector suffered has suffered further contraction but the pace softened last month as lockdown begins to ease off, a new survey has shown.

But Northern Ireland saw the steepest fall of all the UK regions in May, according to the latest purchasing managers’ index (PMI) from Ulster Bank.

Meanwhile, the rate of job cuts eased, but remained marked.

The headline seasonally adjusted Business Activity Index posted 18.9 in May, up from 8.3 in April but still the second-lowest since the survey began in August 2002.

The construction and services sector saw the largest falls, followed by retail and manufacturing.

On the jobs front, Northern Ireland companies continued to scale back their staffing levels during May, and while steep, they have eased from their unprecedented levels seen in April.

“Northern Ireland’s private sector reported some easing in the record rates of decline witnessed in April across output, orders and employment,” Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said.

“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.

“On the employment front, however, Northern Ireland’s rate of job losses compared favourably with most other regions. Nevertheless, the reduction in staffing levels reported by local firms was still on a par with the worst months of the global financial crisis. Clearly the ongoing Job Retention Scheme is preventing widespread redundancies….for now.

“Not only is Northern Ireland’s private sector reporting the steepest rates of decline in output within the UK, it is also the most pessimistic about the year ahead. While the other 11 UK regions all expect business activity to be higher in 12 months’ time, local firms – across all sectors – are expecting output to be significantly lower than it is today.

"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.”

Ulster Business