New export orders slumped to their lowest levels in 69 months in Northern Ireland during February as tensions around the prospect of a no-deal Brexit rose and firms saw customers "holding off" on committing to new projects because of the swirling uncertainty, a new economic report shows.
Northern Ireland firms had won new business from abroad for an unbroken 31-month run up to February, with particularly strong orders from the Republic. But that came to a halt last month, with companies reporting a “sharp decline” in export wins.
Although business activity overall continued to rise modestly, private-sector growth overall fell back to a 29-month low and total new orders fell for the first time in 28 months. That, in turn, prompted companies to cut their staff numbers for the second time in eight weeks.
Richard Ramsey, chief economist Northern Ireland for Ulster Bank, said last month marked the "point of peak uncertainty" for local businesses as the scheduled Brexit withdrawal date loomed ever closer.
Mr Ramsey said fears of a potential “no-deal exit” from the EU was very much reflected in the bank’s latest PMI report.
On Sunday, 56 of the North's biggest employers and business organisations from Bombardier to First Trust Bank to the Confederation of British Industry NI and including the North's two universities, published an open letter to British MPs urging them to take a no-deal Brexit off the table.
‘Marked deterioration’
Mr Ramsey said evidence shows that private-sector firms in Northern Ireland experienced a “marked deterioration” in trading conditions last month which, in turn, had a severe impact on business confidence levels and led some firms to reduce staff headcount.
He said Brexit uncertainty was a key factor and remains the fundamental reason why businesses in the North are pessimistic about their immediate future.
“Manufacturing output stagnated but both construction and retail saw rapid rates of decline. Indeed, retail sales fell at their fastest rate in almost four years and this trend looks set to continue with orders falling at their fastest rate in 49 months. And, as with output, services was the only sector to record a rise in new orders, albeit the pace of growth remains relatively modest.
“The one area where Northern Ireland stands out against the rest of the UK is confidence in the year ahead. Northern Ireland is the only UK region where firms expect business output to be lower in 12-months’ time,” he added.
