Output rises but confidence continues to slide
Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said:
“Northern Ireland was the only region of the UK to see private sector growth pick up in October. However, this sounds much better than it actually is. The pace of expansion remained subdued, and two of the four sectors surveyed - retail and construction - actually saw a contraction last month. But perhaps the most significant finding of the survey is that Northern Ireland firms reported a large drop in confidence looking 12-months ahead. Retail, construction and services are now their least optimistic at any time in the past 20-months, when this indicator started to be tracked.
“The mounting pessimism in the latest survey largely relates to the construction sector. Last month, construction activity fell for the first time in 15-months and at the sharpest rate since November 2016. Unlike their counterparts in the UK, Northern Ireland construction businesses are also seeing their order books shrink - at the fastest rate in 22-months - and this is leading to a decline in optimism. The lack of decision-making in government in Northern Ireland and the resulting logjam in capital projects is now being acutely felt by many construction businesses.
“More positively, the manufacturing sector continues to experience strong demand, despite a slowdown in export orders. Unsurprisingly therefore, manufacturers remain the most optimistic about the year ahead. Clearly, the big factor that will determine whether this optimism is realised is how Brexit pans out. The outcome of the negotiations will determine the trajectory of private sector growth in Northern Ireland into the foreseeable future, particularly in the export-focused manufacturing sector. Today, forecasting growth means forecasting politics.”
The October PMI report for Northern Ireland and the NatWest report for the UK regions are below for your information. Further PMI material including a chart pack, podcast and infographics are available at www.ulstereconomix.com
October PMI report for Northern Ireland
NatWest report for the UK