NI business activity 'stagnated' in October
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The firms surveyed linked a fall in output to the coronavirus pandemic
Business output stagnated in October with any prospect of a pick-up in growth looking slim, an Ulster Bank survey has indicated.
The bank surveys private sector companies every month and the results are generally seen as a good indicator as to how the economy is performing.
New orders fell again and firms continued to cut staff.
Respondents mainly linked a fall in output to the coronavirus pandemic.
Richard Ramsey, the bank's chief economist, said the deterioration was not unexpected due to the reintroduction of Covid-19 restrictions.
'Third successive decline'
"What little momentum there was has been lost during the start of the fourth quarter, with output growth stagnating in October," he said.
"With new orders posting their third successive decline in October and restrictions to remain in place for at least the first half of November, the prospect of a pick-up in growth anytime soon looks slim.
The survey indicates NI is the most pessimistic UK region about future output growth
"Meanwhile Northern Ireland's largest export market, the Republic of Ireland, posted its second successive month of contraction.
"Subdued demand from the Republic is contributing to the continued marked decline in local firms' export orders."
The construction sector was the best performer, recording some growth in October.
'Pessimistic region'
Manufacturing, services and retail firms all reported significant falls in employment levels, while the construction sector posted a modest reduction in headcount.
The survey indicates Northern Ireland is the most pessimistic UK region about future output growth.
"The resurgence of Covid-19 and the reintroduction of lockdowns across Europe is expected to see economies contract over the course of the fourth quarter," said Mr Ramsey.
"Northern Ireland is not expected to be any different with the economy set for an annual decline of around 15% for 2020.
"The longer the restrictions remain in place the deeper the contraction will be.
"The extension of the furlough period until the end of March 2021 will provide some much needed certainty for businesses in an abnormally uncertain world."
Economy shrinking
Meanwhile official data from the Office for National Statistics suggests that in the first quarter of this year the Northern Ireland economy shrank by 4.5%, compared to the same period last year.
That period includes the earliest days of the official lockdown at the end of March.
The fall in output in Northern Ireland was the steepest of any UK region.
The other UK nations saw output shrink by about 2.5%.
The data also suggests the Northern Ireland economy was already weakening before the pandemic with output down 1% year-on-year in the last quarter of 2019.
- Published5 November 2020
