PMI: Northern Ireland's economic recovery lost momentum during August
THE Northern Ireland economy continued to improve during August, but the pace of business activity has lost momentum, new analysis suggests.
The latest Purchasing Managers' Index (PMI) from Ulster Bank indicated that the recovery seen in some regions of England has not been replicated here.
The monthly analysis, produced by IHS Markit, takes a snapshot of the economy based on the feedback from 200 private companies.
The PMI is considered an early indicator of the direction of the economy.
The August survey was broadly reflective of the UK GDP data published on Friday, which found that the economy grew by 6.6 per cent in July, but showed the pace of the recovery has slowed.
Ulster Bank’s PMI showed all headline indicators for the north’s private sector deteriorated in August relative to July.
The overall growth recorded last month was largely driven by the manufacturing sector, while services activity rose for the first time in a year-and-a-half.
But both the construction and retail sectors saw activity fall back following the strong reopening rebound in July.
New orders also took a step back.
Ulster Bank’s chief economist Richard Ramsey the slower rate of business activity in August left Northern Ireland well behind England.
“Interestingly, the devolved regions – who were more cautious in lifting lockdown restrictions – continue to lag their English counterparts,” he said.
Mr Ramsey said while the services sector recorded its first month of growth since the pandemic started, the scale of the rebound was much weaker than anticipated despite the boost from initiatives such as the Eat Out to Help Out scheme.
“Indeed, Northern Ireland’s service sector recovery is lagging well behind the UK and is mirroring the lacklustre performance of the Republic of Ireland’s service industry,” he said.
The PMI also hinted that the start of the labour market recovery remains some way off.
“Northern Ireland’s private sector saw employment fall for the sixth month running in August and with the furlough scheme due to end, this trend looks set to continue,” said the economist.
“All four sectors cut their staffing levels in August with manufacturing reporting the most significant reductions in headcount.
“Overall, Northern Ireland’s loss of momentum in August does not look temporary. New orders fell at a significant rate in August after rising in July for the first time in eighteen months with the rate of contraction most marked within export markets.
“The rise in the number of cases of Covid during September to date, combined with the heightened tensions surrounding Brexit, make the landscape a very challenging one.”