Coronavirus: Business picks up in NI but employment levels fall

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Reuters

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Retail, manufacturing and construction have reported a strong rebound in growth

Business activity in NI picked up last month, signalling economic recovery, but employment levels are continuing to fall, an Ulster Bank survey suggests.

Every month, the bank conducts a survey of a representative sample of firms. It is considered a reliable indicator of economic performance.

Private sector firms are asked about output, staffing levels and exports.

Output and new orders picked up after sharp falls earlier in the year but employment levels continued to decline.

Retail, manufacturing and construction have reported a strong rebound in growth coming from very low levels.

However services, the biggest sector in the Northern Ireland economy, is continuing to contract.

While some firms benefited from reopening, others are reporting that new work has not been as quick to return as expected.

This survey links the speed of recovery to the pace of easing lockdown.

‘Twin challenges’

In comparison to other UK regions, Northern Ireland’s rebound is lagging behind England, but outperforming Wales and Scotland.

But challenges remain around profitability – rising costs including Personal Protective Equipment (PPE) mean the squeeze on profit margins has intensified.

Ulster Bank chief economist Richard Ramsey said a rise in demand in the domestic market boosted new orders.

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Ulster Bank’s chief economist Richard Ramsey warns there will be further job losses ahead

“A further easing of lockdown restrictions in July helped secure growth in private sector activity for the first time in 17 months,” he said.

But he warned there will be further job losses ahead.

“The phasing out of the furlough scheme is anticipated to lead to further redundancies in the months ahead,” he said.

“While the return to growth is welcome news it merely marks the start of a long road to recovery. There remains a huge gap relative to pre-pandemic levels of output/activity.

“Bridging this gap will take years not months and the twin challenges of Covid-19 and Brexit will have to be navigated along the way.”

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