Slight recovery for private sector in May after record downturn in April

Data for May from the Ulster Bank Northern Ireland Purchasing Managers’ Index (PMI) found further steep declines in business activity and new orders in the Province as the coronavirus lockdown continued.

The research, produced for Ulster Bank by IHS Markit, reports that rates of contraction were softer than the records posted in April as restrictions began to ease, but were still sharper than any seen prior to the current crisis.

Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said: “Northern Ireland’s private sector reported some easing in the record rates of decline witnessed in April across output, orders and employment.

“However, these improvements were relatively modest and perhaps weaker than anticipated. Indeed, firms reported their second lowest readings on record for business activity and new orders. And once again, Northern Ireland recorded the fastest rates of decline in output of the 12 UK regions.”

Mr Ramsey also said: “On the employment front, however, Northern Ireland’s rate of job losses compared favourably with most other regions. Nevertheless, the reduction in staffing levels reported by local firms was still on a par with the worst months of the global financial crisis. Clearly the ongoing Job Retention Scheme is preventing widespread redundancies ... for now.”

He added: “All four sectors monitored in the survey reported severe reductions in output and order books. Manufacturing and retail managed to post readings in the 20s whereas services and construction were in the teens. On a more encouraging note, some 15% of manufacturing firms reported a rise in output in May relative to the previous month.

“However, these firms were outnumbered more than four-to-one by those indicating a decline in activity.

“Services firms are faring less well than manufacturing, with just one in 20 reporting an increase in activity in May. Meanwhile, almost three-quarters of firms within the services industry reported a fall in activity last month, down from 90% in April.”

The headline seasonally adjusted Business Activity Index posted 18.9 in May, up from 8.3 in April but still the second-lowest since the survey began in August 2002.