Is Northern Ireland exhibiting the early warning signs of yet another economic downturn?
That’s a strong possibility, concludes economists with Ulster Bank, one of the Emerald Isle’s largest financial institutions, as a result of its latest monthly report of the nation’s economic conditions.
Ulster Bank regularly surveys financial activity within the private sector in a monthly type of a report known as a Purchasing Managers Index (PMI). The bank’s PMI is widely considered to be a reliable indicator of economic conditions and a popular forecasting tool. While the PMI is not the official word on the economy, which will be released soon, the numbers and the general summary of economic conditions are highly trustworthy and respected.
The conclusion reached through this latest report, the June survey, was that economic markers had shown a decline in productivity for the fourth straight month — ever since the March report — and that this continuing trend line could portend rough roads ahead.
Perhaps most notably, the June report marked the steepest decline from one month to the next since the November, 2012 survey.
These four consecutive slumping months represent an obvious reversal of direction after six years of growth. The survey results, on top of similar previous monthly findings, points to challenging times ahead, said the bank’s economists.
Manufacturing seemed to be the most affected sector, according to data. The drop in orders from both domestic and overseas customers is particularly worrisome to the bank economists. In fact, these orders fell at the highest month-to-month rate seen in the last decade or more. That reinforces the sense that economic output within the next several months will slump noticeably, which is likely to continue to create a drag on the rest of the Northern Ireland economy.
Brexit Casts a Long Shadow
Governments and economists throughout the United Kingdom are carefully watching the effect of the British withdrawal from the European Union — more popularly known as Brexit — upon affected economies.
With this in mind, the report authors noted that the way in which the UK breaks from Europe will be a major influence on economic conditions to come. Not that the country has much room for slippage. Ever since 2007, Northern Ireland’s economy has been the weakest of the nations that make up the UK.
Similar Numbers Seen Elsewhere
Surveys of the construction and manufacturing sectors throughout the UK sponsored by other parties have also shown similar productivity declines.
It all leads to the suggestion of falling economic times to come throughout the United Kingdom. But by how much? That’s still to be determined, said Ulster Bank economists in speaking of this latest research report. There are too many factors, in addition to Brexit, that could affect conditions on the ground.
About the Survey
The scoring of the PMI is relatively simple. Any cumulative economic activity score above 50 points represents growth for that month, while a number below 50 indicates economic draw-down.
This June reading of 44.1 followed a May activity score of 46, in furtherance of the downward trend of the last several months.
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