The Northern Ireland private economy contracted in December 2014 for the first time since June 2013 according to PMI (purchasing managers' index) survey data published Monday.
We reported on Friday that UK industrial production and construction output unexpectedly contracted in November, but manufacturing a subset of industrial production, increased.
PricewaterhouseCoopers (PwC), the Big 4 accounting firm, said in a report last month that employment in NI grew by around 14,000 over the past 12 months to more than 821,000, taking the region’s employment rate for those aged 16-64 to 68.5%, an increase of 1.4% points over the year. "However, this is well below the UK average of 73.0% and is the lowest rate among the UK regions.
Northern Ireland has 566,000 economically inactive people, 5,000 more than a year ago and at 27%, is the highest amongst the UK regions and significantly above the UK average of 22.2%."
PwC says that, despite steady jobs growth, the latest data from the Annual Survey of Hours and Earnings suggest that, in the year to April 2014, average earnings in Northern Ireland declined in real terms and at a greater rate than the rest of the UK.
The firm forecast that NI grew by 2.2% in 2014 [pdf].
Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said: “Northern Ireland’s private sector slowdown was particularly marked in Q4, with the rates of growth in business activity, new orders and job creation the weakest in the six quarter series of growth. Indeed, the latest monthly survey for December reveals that following seventeen successive months of growth, Northern Ireland’s private sector recovery effectively ground to a halt as far as business activity and employment growth were concerned. The business activity index fell marginally below the expansion / contraction threshold (50.0) for the first time in eighteen months to signal a fractional decrease in output. Meanwhile the employment index fell on the right side of the ‘no change’ threshold by the narrowest of margins to indicate a marginal rise in employment.
“Northern Ireland is not unique in experiencing an economic slowdown. The equivalent PMI survey for the UK reported the weakest rate of growth in nineteen months. Meanwhile global output growth slipped to a fourteen month low in December. External economic conditions have a major bearing on Northern Ireland’s economic performance particularly for exporters. Economic stagnation in the Eurozone and the wider global economic slowdown has impacted upon the local manufacturing sector in particular. Northern Ireland’s manufacturing firms reported their first decline in output, new orders and employment since mid-2013."
Business activity declines: The PMI survey shows that the headline seasonally adjusted Business Activity Index fell below the 50.0 no-change mark for the first time since June 2013, posting 49.8 in December from 52.6 in the previous month. The fall in activity in Northern Ireland contrasted with ongoing growth across the UK economy as a whole. Activity decreased at manufacturers and retailers, but continued to rise in the services and construction sectors. New orders continued to increase during December, but the rate of growth slowed to the weakest in the current 19-month sequence of expansion.
New orders: Outstanding business decreased for the third month running, with the sharp decline the strongest since March 2013. Panellists indicated that a lack of new work to replace completed projects had contributed to the latest fall in backlogs. Meanwhile, employment in the Northern Ireland private sector was broadly unchanged.