A FURTHER slump in new orders and a corresponding rise in unemployment last month suggest Northern Ireland is still in the grip of a deep recession, according to a new economic report.

Business activity fell again in June, and firms cut more jobs in a bid to keep costs under control, according to the latest research by Ulster Bank.

The bank says there is a growing divergence between the UK economy, which posted its 14th successive monthly rise in business activity in June, and Northern Ireland, which has not recorded any growth since November 2007.

The latest Ulster Bank Purchasing Managers’ Index (PMI) shows there are deep underlying concerns about the health of the local economy.

Northern Ireland is currently experiencing its third successive year of economic decline.

This compared to just one year of contraction in the UK in general.

Staffing levels in the private sector fell back in June for the 28th month in a row. This is against a rising UK trend, reflecting the lack of confidence in the marketplace and the decline in new business.

The report shows manufacturing remains the best performing sector in the local economy, while the construction and service sectors are now in an extremely weak state.

Richard Ramsey, Ulster Bank’s chief economist in the North, said it was debatable at this stage whether Northern Ireland had actually exited recession.

Mr Ramsey added: “Given the absence of a meaningful economic recovery during the first half of 2010, unlike the UK, it now looks increasingly likely that Northern Ireland will see a further contraction in economic growth, albeit marginal, in 2010.

“Even a return to growth of around 1 per cent in 2011 will still feel like a recession, as unemployment is not expected to peak until 2012.”

The fact that both the service and construction sectors are the most exposed to public expenditure means significant job losses in these sectors are inevitable.