Recession hitting Northern Ireland business hardest
The recession is hitting businesses in Northern Ireland harder than anywhere else in the UK, a new survey revealed today.
The Ulster Bank Purchasing Managers Index (PMI) showed that economic activity, new business and job numbers all fell sharply in March as the grip of recession on the province tightened.
And the report, published today, showed that private sector activity in the province contracted at a faster rate than any other area of the UK during the first quarter of the year.
The construction and retail sectors were the worst performing in the local economy since the turn of the year, the study on behalf of the Ulster Bank found.
Both new and existing workloads continued to drop during the month, leading firms to cut jobs and reduce the prices they charged, the bank said.
“All UK regions, with the exception of Northern Ireland and the South West (of England), saw an improvement in the business activity index in March. According to the PMI, private sector activity in Northern Ireland has contracted at a faster rate than any other UK region during the first quarter of 2009,” said Richard Ramsey, an economist at Ulster Bank.
“This is continuing the trend that was evident throughout 2008.
“Northern Ireland firms continued to reduce their staffing levels at a rapid rate in March.
“However, the pace of decline was more marked in the UK, albeit marginally, for the first time in 16 months. While all sectors of the economy reduced their respective headcounts in March, the rate of decline was most pronounced in the construction sector,” he added.
Mr Ramsey added that the weakness of the sterling is having a bigger impact on Northern Ireland’s cost base compared with the rest of the UK.
Input cost inflation among Northern Ireland firms rose for the first time in four months, in contrast to UK firms, where input costs fell.
The survey showed that output from businesses in the province decreased for the sixteenth month in a row, with construction and retail the worst- performing sectors.
New business in the private sector fell again, which the bank attributed weak demand and depressed business confidence.
Unsurprisingly, the lower activity led to reduced employment levels in March, with the pace of job shedding close to the record levels seen in October 2008.
March saw a raft of redundancies at high profile firms in the province such as FG Wilson, Nortel and Visteon, and Ulster Bank noted that non-replacement of leavers and shorter working hours were common across all sectors.
The report also showed that despite higher input costs, Northern Ireland companies reduced their prices for a sixth consecutive month in the face of lacklustre demand and fierce competition.
Panel members noted increased prices paid for imported goods, which they attributed to the weakness of sterling against major world currencies.
Retailers signalled the sharpest increase in their cost burdens.
Glyn Roberts, from the Northern Ireland Independent Retail Trade Association, said current conditions made it vital for banks to support small businesses through the current tough climate.
“There’s no doubt people are spending less and consumer demand is down. People are putting off buying a new car or going out to a restaurant, and that permeates down,” he said.
“The key requirement is for banks to continue lending to small businesses and retailers.
“Despite the recent assurances given by banks, I don’t think we’re seeing that on the ground — access to finance is still a significant issue.”
Bryan Gray, from Northern Ireland Manufacturing, said while some sectors are holding up well, firms that make products related to the motor and construction industries are clearly hurting.
“It is disappointing that the local figures are down again when recent national figures showed an improvement,” he said.
“It demonstrates that we have a long hard road ahead before we turn the corner.”