Activity falls markedly in October
Today sees the release of October data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – indicated that the Northern Ireland private sector remained in contraction. Business activity, new orders and employment all decreased over the month, albeit at softer rates than in September. Meanwhile, inflationary pressures also moderated.
Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said:
“Northern Ireland’s private sector has started the fourth quarter the way it ended the third, with business conditions deteriorating. However, the pace of decline in output, new orders, employment, exports and future output expectations all eased in October relative to September. Nevertheless, the picture painted by local businesses remains a rather gloomy one. Output, exports and employment have now been falling for eight, nine and 10 months respectively. Northern Ireland remains rooted to the bottom of the regional league table for output and orders. Furthermore, local firms continue to see their input costs rise at faster rates than anywhere else in the UK.
“At a sector level, there was some modest improvement for manufacturing and services with a return to positive growth in some areas. For instance, manufacturing output expanded for the first time in six months and the rapid decline in orders appears to be levelling-off. Meanwhile services firms increased headcount, albeit marginally, for the first time in 10 months, with businesses more optimistic about output growth in a year’s time.
“Context is important here, as manufacturing’s improvement is coming off the weakest quarter (Q3) in 10½-years. Similarly, the improvements cited by service sector firms follow multi-year lows. It remains to be seen whether these latest improvements are sustained.
“The environment for construction and retail remains even more challenging. Both sectors saw the pace of contraction accelerate across a number of indicators, with retail reporting the fastest rates of decline amongst all sectors in terms of output/sales, orders and employment. Retailers have reported falling sales throughout 2019 with orders falling in October at their fastest pace in almost 8½-years. This is feeding through to employment with staffing levels falling at their fastest rate in seven years. These findings chime with incoming news on new car sales and demand for retail property. All of which point to subdued consumer confidence.
“Looking ahead, Northern Ireland remains the only UK region where firms expect output to be lower in twelve months’ time. However, firms are significantly less pessimistic than they were in September. Last month’s Brexit deal has done little to reduce the high degree of uncertainty facing businesses. With election fever now gripping the country, political uncertainty and business uncertainty will loom large in 2020.”
Key Quarterly Data for Q3 2019
- Business Activity = 44.7 (lowest since Q4 2012 = 27 quarter low)
- New Orders = 42.7 (lowest since Q2 2012 = 29 quarter low)
- Employment = 47.9
- Exports = 39.0 (lowest since Q3 2011 =31 quarter low)
Sectoral Business Activity / Output Q3 2019
- Manufacturing = 43.7 (lowest since Q1 2009 = 42 quarter low)
- Services = 45.7 (lowest since Q4 2012 = 27 quarter low)
- Construction = 42.4 (lowest since Q4 2012 = 27 quarter low)
- Retail = 46.0
The October PMI report for Northern Ireland, the NatWest report for the UK regions and the Republic of Ireland’s Construction are attached for your information. Further PMI material including a chart pack, podcast and infographics are available at www.ulstereconomix.com