Stark warning for local economy over likely impact of coronavirus

NORTHERN Ireland’s economic growth will deteriorate as a result of coronavirus despite some signs of improvement last month, according to a survey today.

The Ulster Bank purchasing managers’ index said the private sector shrank last month, with the rate of decline in output and new orders speeding up.

Business confidence had also decreased, with Brexit uncertainty hitting some export orders — but employment rose for the third month running and to the greatest extent since November 2018.

But the bank said since the survey was carried out business confidence had deteriorated, with the spread of coronavirus from China into Europe threatening to trigger a global recession.

Ulster Bank chief economist Richard Ramsey said things can be expected to get worse before they get better. Northern Ireland, along with the rest of the UK, is also contending with the loss of a major airline after Flybe’s collapse.

The onset of the virus in the economic powerhouse of China

has left its economy severely wounded. Mr Ramsey said that as a result “China’s manufacturing PMI signalled its deepest contraction on record”.

“This has severely disrupted global supply chains with the hospitality, tourism and airline industries hit by a slump in demand,” he said.

“Indeed, one leading UK regional airline has gone into administration.

“Economic conditions for all economies, including Northern Ireland, are expected to get worse before they get better.”

Mr Ramsey added that during February Northern Ireland was at the bottom of the UK regional pile for new orders, and was the only region not to report a rise in output.

In fact output had fallen for the 12th month in a row, the survey said.

New orders fell slightly with some firms reporting that contracts coming to an end were not being renewed.

Demand in home markets was up but export orders were down for the 13th month in a row. The survey said: “Brexit uncertainty is cited as deterring some customers. That said, other firms are benefiting from increased demand from the Republic of

Ireland, which is continuing to enjoy strong economic growth.”

According to the PMI, all four sectors — retail, construction, services and manufacturing — saw a fall in activity in February, with retail experiencing the worst deterioration.

However, the services sector, which covers everything from law firms to restaurants, was the only sector where the pace of contraction had accelerated.

Input costs were up across the board, with respondents saying that higher salaries were the reason for the trend. Construction firms had the sharpest increase in costs.