Business

North is entering a recession, new business survey confirms

The construction sector is beginning to suffer as the north enters a recession
The construction sector is beginning to suffer as the north enters a recession The construction sector is beginning to suffer as the north enters a recession

FEARS that Northern Ireland's private sector is going into recession have been further confirmed by a new business survey, a leading economist has said.

Richard Ramsey, Northern Ireland chief economist with Ulster Bank, said data from the bank's August Purchasing Managers' Index (PMI) showed that economic uncertainty around Brexit had contributed to an ongoing decline in the sector.

The survey found marked reductions in output and new orders, low business confidence and higher job losses.

The construction sector was among the worst hit and manufacturing is also suffering.

Output in August was down for the sixth month running, the survey found, with the north recording the sharpest reduction of the 12 monitored UK regions.

Confidence among Northern Ireland companies also dropped sharply last month. Manufacturing, construction and retail companies reported a pessimistic outlook, with weak optimism at service providers.

Mr Ramsay said the survey provides "further evidence that Northern Ireland’s private sector has entered, or is entering, recession".

"Output has fallen for the sixth month in a row and exports have declined for the seventh month," he said.

"Add to this an eighth successive month of falling employment and it is hard to avoid this conclusion.

"All four sectors monitored by the PMI are in decline for the fourth month running according to the latest survey.

"Perhaps the most concerning elements of August's report are the pace of deterioration in business conditions within the construction and manufacturing sectors.

"Construction orders plunged to an 81-month low and have now been falling consistently for 12 months.

"Within manufacturing, both output and orders continue to fall markedly, and significantly this is now impacting on staffing levels. Manufacturers posted their fastest rate of job losses in over seven years during August.

"It should be remembered though that the deterioration in the employment picture is coming from a position of considerable labour market strength. Indeed, many firms continue to cite skills shortages as a barrier to their hiring intentions. The lack of hiring in some cases is therefore not for the want of trying.

"If the PMI's sentiment indicator is correct though, the labour market will likely deteriorate further over the months ahead. Northern Ireland firms are now their most pessimistic since this started to be tracked almost three years ago. This is particularly the case in the construction sector, with services the only sector where activity is not expected to be lower in a year's time."