The Northern Ireland economy remained in growth during May although the rate of expansion in business activity slowed for the second month running as new orders were broadly unchanged.
The new data is published in the latest Ulster Bank Northern Ireland PMI report which shows that employment also increased at a weaker pace during the month.
“According to the latest Ulster Bank PMI, Northern Ireland’s brief period of out-performing the UK as a whole appears to have come to an end,” said Richard Ramsey, chief economist for Northern Ireland with the Ulster Bank.
“Local firms continued to report rising levels of activity and job creation, but a significant slowdown has been in evidence.
“Indeed, Northern Ireland reported the sharpest slowdown of all the UK regions last month, with the rate of growth in business activity and employment easing to 9-month and 8-month lows respectively.”
With new orders flat in May, he said the near-term outlook suggested more of the same to come.
“It is worth noting that the rates of growth in business activity, new orders and employment are well below the rates of growth recorded prior to the downturn.
“The headline indices, however, conceal contrasting performances at a sector level. The sharp slowdown in business activity, new orders and employment growth is largely attributable to a marked deterioration in business conditions within the construction sector.”
Mr Ramsey said locally-owned construction firms had reported the fastest rate of decline in business activity since March 2013.
The dramatic fall in new orders in April accelerated in May, with the rate of decline the steepest since November 2012.
“Construction firms also cut their staffing levels for the first time in eight months,” he said.
“A marked slowdown in the GB construction market appears to have hit local firms hard.”
Outside of construction, he said manufacturing had also reported a further decline in both output and employment levels in May.
On a positive note, he said orders have been on the rise in recent months, hitting a 10-month high in May and suggesting a more positive picture for output in the months ahead..
“The retail sector remains the most resilient to the slowdown, with the sector maintaining its strong rates of growth in employment and sales,” he said adding that even there retailers reported a notable slowdown in new orders in May.
“Overall, business activity is rising albeit at a subdued rate, and it is the Northern Ireland construction sector that provides most cause for concern.
“This slowdown is likely to continue into the third quarter of the year, but much will depend on macro issues, including the performance of the UK economy, and the forthcoming referendum.”