Private sector here ‘may be in grip of recession’
A LEADING economist has said the latest health check on the economy here has provided further evidence that Northern Ireland’s private sector has entered, or is entering recession.
Ulster Bank chief economist Richard Ramsey was speaking as the lender published the results of its August Purchasing Managers’ Index (PMI), which featured input from 200 companies across Northern Ireland’s manufacturing, services, retail and construction sectors. It found that while the pace of decline in output, new orders and exports all eased in August relative to July, rates of decline remained significant, with output and orders the weakest of any UK region.
The survey included a number of red flags for both the construction and manufacturing sectors.
New orders in the construction sector plunged to an 81 month low during August and have now been falling consistently for 12 months. Meanwhile, manufacturing firms reported the fastest rate of job losses in over seven years.
The business sentiment index also revealed stark levels of pessimism for both sectors during August.
Services was the only sector expecting growth in output in 12 months’ time, although the rate of anticipated expansion is marginal.
“The latest PMI provides further evidence that Northern Ireland’s private sector has entered, or is entering, recession,” said Richard Ramsey (left).
“Output has fallen for the sixth month in a row and exports have declined for the seventh month. Add to this an eighth successive month of falling employment and it is hard to avoid this conclusion.”
The economist said all four sectors monitored by the PMI have been in decline for the fourth month running. “Perhaps the most concerning elements of August’s report are the pace of deterioration in business conditions within the construction and manufacturing sectors.”
Mr Ramsey said the deteriorating employment picture is coming from a position of strength, with NI recording strong employment data in 2019.
But he added: “If the PMI’s sentiment indicator is correct though, the labour market will likely deteriorate further over the months ahead.”