Northern Ireland

Economic downturn 'may have begun' in Northern Ireland

piggy bank Image copyright Getty Images/agrobacter

Northern Ireland's economy may have begun a downturn, research from Ulster Bank has suggested.

The bank conducts a monthly survey of private sector activity in what is considered a reliable indicator of the economy.

It indicated there have been four consecutive months of falling output since March.

The output decline in June was at the steepest rate since November 2012.

The bank's chief economist Richard Ramsey said a clear trend was emerging.

"After six years of growth, it appears that the economic cycle has turned," he said.

"The severity or otherwise of that downturn will depend on a range of factors.

"The kind of Brexit that we see will of course be a major factor."

'Output falling'

Mr Ramsey said data for new orders and exports was a particular concern.

"Both domestic and overseas order books are contracting at a rapid rate, which suggests that activity will be subdued in the coming months.

"Indeed, export orders fell at their fastest pace in almost eight years.

"The manufacturing sector appears particularly weak at present, with output falling at its fastest pace in June for more than a decade."

How does the survey work?

This type of survey is known as a Purchasing Managers Index (PMI) and is used widely in developed economies.

It uses an index approach where any reading above 50 is growth and below 50 is contraction.

The headline business activity figure for Northern Ireland in June was 44.1 down from 46 in May.

PMIs are considered a fairly reliable guide to what later official data will show.

Northern Ireland was not alone in having experienced deteriorating business conditions in June.

Similar surveys for the UK have suggested that the manufacturing and construction sectors contracted in June with output in the dominant services sector flat.

Image copyright Ulster bank
Image caption Richard Ramsey said data for new orders and exports was a particular concern

Mr Ramsey said US/China trade disputes had having a dampening effect across global manufacturing.

The most recent official output data for Northern Ireland covers the final quarter of 2018.

It indicated that the local economy had expanded by 0.2% compared to the previous quarter.

The data for the first quarter of 2019 is due to be published next week.

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