More volatility in Northern Ireland economy as output, orders and exports contract
MAY proved another volatile month for the Northern Ireland economy after a significant contraction in new orders, exports, employment and overall output.
It's the first time in six years all four monitored sectors have slumped in Ulster Bank's monthly PMI survey of private sector activity, widely seen as an accurate bellwether of the regional economy.
And the bank's regional chief economist Richard Ramsey admitted: “This clearly suggests that the global slowdown which had been impacting other economies is now clearly evident within Northern Ireland."
At a headline level, activity and new business continued to fall markedly, often linked to Brexit uncertainty, and as a result companies lowered their staffing levels again.
There was some relief on the price front, as the rate of input cost inflation eased. But the extent of input price increases far outweighed that of selling charges again during the month.
Within the PMI index, the overall reading for Northern Ireland was 46 (a figure above 50 indicates growth).
The four monitored sectors included manufacturing at 46.4 (output and orders fell are their sharpest since 2012) and retail at 37.7 (sales here slumped at their fastest pace in seven years).
The figure for services was 46 and construction 47.5 as Northern Ireland saw output and orders fall faster than any other UK region.
Mr Ramsey added: “Brexit stockpiling by manufacturing companies had been inflating the performance of local firms in recent months. Now that the rapid phase of stockpiling activity has passed, this latest data reflects the reality of current demand.
“This is weakening in both the domestic and overseas markets, with output at 76-month low and orders falling at an 81-month low.
“It's not just manufacturing that is weakening; all four sectors saw falling output for the first time in six years. Respondents in the retail sector pointed to sales activity falling at the fastest rate since May 2012, and retailers are scaling back their employment activity as a result.
“Looking ahead, orders books across all sectors suggest that the current period of weakness will continue. Construction firms have now reported falling orders for nine-successive months and retailers have been reporting falling sales every month in 2019 to date.
“In terms of employment, whilst private sector firms are continuing to reduce staffing levels, it should be remembered that this is from record employment highs and the labour market remains relatively strong.
“Notably, despite the current challenges, the level of pessimism amongst respondents regarding the 12-months ahead has eased. Indeed, Northern Ireland firms expect output to have risen in a year's time.
“So whilst firms expect challenges in the short-term, citing Brexit as one of the key factors, their expectations for the longer-term are marginally better.”