Northern Ireland's economy in the mire in first post-Brexit PMI study by Ulster Bank

Andrew Madden

THE north's economy is in the mire, according to the first officially recognised business barometer to be published in the wake of the Brexit vote.

Ulster Bank's monthly purchasing managers' index (PMI) shows that private sector performance declined in June for the first time in 16 months.

The figures also show reductions in output and new business, alongside the fastest rate of inflation since March 2012.

Respondents to the closely-followed survey primarily attribute the lower activity to uncertainty caused as a result of June's out vote.

This report follows suit from the UK's construction industry PMI, which earlier this week recorded its fastest fall since 2009.

Of the four sectors monitored, services were the worst hit by the post-referendum fallout, with activity decreasing at the fastest pace since February 2013.

Retail output grew slightly by 0.4, but orders decreased at an alarming rate.

Employment was the only area in which numbers continued to rise, following a trend which began 18 months ago.

In contrast to the picture for total new business, new export orders increased during the month as the weakness of sterling helped companies to secure new work from clients in the south.

The rate of this growth was slower when compared to the previous month, however, when the rate was 53.3 to this month's 51.9. A figure of 50.0 indicates no change.

Following the dramatic fall in value of sterling, the cost of importing goods rose - which had a knock-on affect to prices charged.

Input costs were the highest they have been in four years - jumping from 58.5 to 64.6. The rise in costs in the north was much faster than in the rest of the UK.

Ulster Bank's regional chief economist Richard Ramsey said the figures were not surprising and pointed out that much of the UK was in the same position.

“The weakness of sterling following the referendum played a key role in certain aspects the local economy during the month,” he said.

“Delving into the sector data shows companies in the service economy have had the most difficult month, with activity and new business falling at the sharpest rates since early-2013.

“Construction remained in contraction territory, but manufacturers were able to raise production on the back of new order growth and rising export demand in particular.”

“Overall, the latest PMI is no doubt concerning for the Northern Ireland economy.

"But we shouldn't read too much into one month's survey. The data flow in coming months will give a clearer picture of the broader trajectory of the local economy.”


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