Business Irish

Saturday 18 November 2017

Private sector activity falls in Northern Ireland

Richard Ramsey, Ulster Bank's Northern Ireland economist
Richard Ramsey, Ulster Bank's Northern Ireland economist
Colm Kelpie

Colm Kelpie

Northern Ireland's private sector has faced a difficult start to the year, with output, new orders and employment all falling.

The drop in business activity - the second successive fall - was the largest in over two years, according to the latest Ulster Bank Northern Ireland Purchasing Managers' Index.

The headline seasonally adjusted Business Activity Index dipped to 48 in January.

Richard Ramsey, Ulster Bank's Northern Ireland economist, warned the strengthening sterling will have a detrimental impact on the private sector recovery in the North.

"Local firms reported their first simultaneous decline in output, new orders and employment since May 2013," Mr Ramsey said. "However, economic conditions are perhaps not quite as bad as this headline suggests, at least not for all sectors."

The declines in both new orders and employment were marginal, and the inflationary pressures are easing.

At the end of last year, the manufacturing and retail sectors pulled the overall business activity index marginally below the expansion/contraction threshold of 50. In January, these two sectors were joined in contraction mode by construction, but the economy's largest sector, services, recorded its 19th consecutive month of expansion.

"The continued strength of the local services sector is perhaps overshadowed by the fact that Northern Ireland's economic recovery is continuing to diverge from the UK," Mr Ramsey added.

"The exchange rate is one factor that impacts local firms more than their counterparts in Britain. "In 2015, it is set to be a headwind for the economic recovery."

Irish Independent

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