Source: Markit Economics

Northern Ireland's private sector worsened in September, with both business activity and new work falling at faster rates according to the latest Ulster Bank Northern Ireland PMI (Purchasing Managers' Index) report - - produced for Ulster Bank by Markit Economics.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: “The latest survey highlights that it is not going to be a straight line recovery, with the rate of output decline accelerating in September. That said, the quarterly trend continues to show that the pace of contraction eased markedly in Q2 and again in Q3. Nevertheless, it is still disappointing that NI remains the only UK region waiting to return to growth.

“It is interesting to note, that Wales & the North East, whose economies are similar to NI, are currently experiencing the strongest rates of growth in the UK. A more severe property downturn in NI, alongside the economic chill from the RoI, are the primary factors behind this disparity.

“At a sector level, the UK’s service industry (excluding retail) returned to its long-run average growth rate in September. However, the corresponding sector in NI is still experiencing falling output. Furthermore, NI’s services firms continue to report the weakest levels of activity of all the sectors and this is feeding through into job losses. Indeed, Q3 2009 was the first time that the service sector witnessed a noticeably faster rate of employment decline than the manufacturing sector.

“While the pace of decline in employment, new orders and output all eased in Q3, the squeeze on profit margins intensified.”

The main findings of the September survey were as follows:

Business activity fell for the twenty-second month in a row

Latest data signalled that the contraction of business activity in the Northern Ireland private sector continued in September. Despite accelerating from the previous month, the pace of reduction was the second-weakest for sixteen months. However, the overall decline in activity was in contrast to solid growth seen across the wider UK economy. Companies that reported a decline in activity levels frequently attributed this to reduced sales volumes and weak economic conditions.

Levels of incoming new business placed at Northern Ireland private sector companies fell again in September, extending the current period of reduction to twenty-two months. Although the pace of contraction accelerated from a month ago, it was still much slower than the considerable declines seen around the turn of the year.

Job shedding persisted

Employment in the Northern Ireland private sector fell for the nineteenth successive month in September, decreasing at a slightly faster rate than in August. Where a reduction in staffing levels was signalled, respondents generally attributed this to reduced sales and an uncertain outlook for demand. By sector, staffing levels fell to the greatest extent in construction.

Prices charged reduced at the fastest rate for seven months

Output prices set by companies operating in the Northern Ireland private sector continued to fall in September, with the rate of decline accelerating to the most marked for seven months. Panellists cited strong competitive pressures as having restricted their ability to raise output charges. Discounting has now been registered throughout the past twelve months.

Average input costs faced by Northern Ireland private sector firms rose for the seventh month running in September. Despite remaining historically weak, input price inflation was the strongest since March.