With economic forecasts for the UK being recently and worryingly downgraded, there has been further bad news with private business activity in Northern Ireland falling for the first time in over 12 months. The latest report by the Ulster Bank shows that in May there were reductions in output and new orders in the private sector with inflation hitting demand for products and services. As the general public grapples with the cost of living crisis it is no surprise that spending on many consumer products was going to fall fairly sharply and so it seems to be proving.
Economic Forecasts Being Downgraded On A Monthly Basis
Talking about this latest bank report, Richard Ramsey, chief economist for Ulster Bank in Northern Ireland, is quoted in an article on the ITV News website, saying:
“Economic forecasts at a global and UK level continue to be downgraded on an almost monthly basis.
“The latest survey of Northern Ireland’s private sector saw the deterioration in business conditions accelerate in May.
“Local firms reported a fall in business activity for the first time in 14 months with the significant declines in retail and construction outweighing continued growth within the manufacturing and services sectors.
“Inflationary pressures and heightened uncertainty are hitting demand and delaying investment, its presence felt, particularly on retail, with both sales and new orders slumping in May.
“Construction remains mired in an order book recession with last month’s steep decline marking the 11th successive month of contraction.”
The Overall Outlook Is For Things To Get Even Worse
Mr Ramsey added: “The overall outlook is for things to get worse, with new orders falling at their fastest pace since February last year.
“Northern Ireland firms’ order books contracted at the fastest rate amongst the 12 UK regions.
“Manufacturing, services, construction and retail all contributed to the drop in incoming business.
“Despite the advantages afforded to local firms through the NI Protocol, Northern Ireland firms remain the least optimistic of any UK region regarding sales/activity in 12 months’ time.
“Local firms expect sales and activity to fall in a year’s time, with this negativity driven by retail. Manufacturing is the only sector projecting meaningful growth in 12 months’ time.
“Overall, with economic conditions set to deteriorate, the call for the Chancellor and Stormont to provide additional support for business is set to intensify.”
None of the above is good news, the only positive is that unemployment is still falling. Help will definitely be needed if many businesses in the private sector are to survive the next few months.