A SHARP slide in new business, a further squeeze on profits and yet more job losses combined to make November one of the bleakest months on record this year for firms in Northern Ireland, the latest economic research suggests.
Sectoral analysis showed business activity in November fell at its fastest pace in the North since April 2009, as firms chased orders in vain and businesses hit by the slump had to lay off staff.
A new report on the economy published today detailed a notable deterioration in the local business climate – in stark contrast to what is happening in the rest of the UK.
According to the Ulster Bank Northern Ireland Purchasing Managers’ Index (PMI), the latest slump brings the period of contraction in new orders in the North to three years overall. In the UK, economic activity suggests there has been 17 months of growth.
Richard Ramsey, Ulster Bank’s chief economist in Northern Ireland, said private sector firms in the North are approaching the end of the year with a further deterioration in business conditions.
“Unlike the UK economy, 2010 has not proved to be the year of recovery that many local firms had hoped for. It should be remembered that the PMI survey is not a business confidence survey, and instead is based on the factual responses of how individual businesses are actually faring.
“The pace of decline in new orders accelerated for the third month in a row during November, with 44 per cent of all firms posting a fall,” he added.
According to the Ulster Bank PMI survey, the sector in biggest trouble in the North is, unsurprisingly, construction, which is continuing to witness one of the fastest rates of decline in new business.
But new orders have also fallen at their sharpest rate in the services sector since March 2009. The local manufacturing sector – the one sector which had bucked the wider trend of decline in the North – is also showing signs of stress.
Manufacturing output fell last month for the first time in five months.
Mr Ramsey said cost inflation was running at its highest rate in the North for more than two years, while output price deflation remains a significant problem for local firms, particularly within the services and construction sectors.
“Whilst the economic recovery in the UK has enabled UK firms to raise prices of their goods and services for the last 12 months, the same cannot be said for Northern Ireland,” he added.
Meanwhile, “tentative signs of stabilisation” in the Republic’s construction sector over the summer months gave way to a “renewed weakness” in new business in the past three months, with a steep reduction in civil engineering activity, according to Ulster Bank’s construction PMI.
