Worst of recession over in the North

The worst of the recession has been and gone in the North, new figures indicated today.

While business activity in the region continues to fall, and at a rate faster than the rest of the UK, the downturn is past its peak, according to the latest Purchasing Managers’ Index (PMI) survey.

April’s drop in output was the least marked for eight months and new business fell at a much slower rate, the PMI found.

And though the labour market continued to contract, job shedding was less severe than that seen in the last two financial quarters.

Senior economist with Ulster Bank Richard Ramsey said there were signs the economic climate was improving.

“The fourth quarter of 2008 and the first quarter of 2009 have witnessed severe contractions in economic activity the world over,” he said.

“However, a range of indicators, including the PMIs, suggest that the worst is now behind us.

“This theme is also apparent in the latest PMI for NI with five of the six indicators improving in April. Indeed, the latest survey indicates the highest reading for business activity in eight months. This indicates that the pace of economic decline is slowing. That said, the PMI still indicates that NI’s private sector continues to contract at a more rapid rate than any other UK region and is some 10 index points below the UK reading.

“Meanwhile, the pace of decline in employment levels has also eased and is broadly in line with the UK as a whole. However, this is still consistent with significant job losses across all sectors of the economy.”

But Mr Ramsey warned that businesses in the North were suffering more as a result of the drop in value of sterling.

“One key difference between the NI and UK PMIs concerns inflationary pressures. After a few months of falling input costs, NI firms have reported rises in their cost base for the second month in a row. Conversely, UK firms are still reporting an easing in cost pressures.

“This suggests the weakness of sterling is having more impact on NI than the rest of the UK. Given that NI is the only part of the UK to share a land-border with the Eurozone – the Republic of Ireland – this is perhaps not surprising.”