Manufacturing in Northern Ireland “has gone from the most optimism sector to the most pessimistic in the space of one month”.
n June it suffered its biggest month-on-month fall in output on record, according to the Ulster Bank’s purchasing managers’ index (PMI).
The statistics paint a bleak picture as we were the poorest-performing UK region last month, with the Brexit protocol-related concerns suggested as a contributing factor.
The Ulster Bank survey shows local firms have had a significant loss of momentum in recent months.
The bank’s chief economist Richard Ramsey described the findings as “particularly stark”.
“Demand conditions in June deteriorated significantly more in Northern Ireland than elsewhere, with local firms reporting the steepest declines in output and orders of the 12 UK regions,” he said.
“While many manufacturers have benefited from the NI Protocol, the current political impasse between the UK Government and the European Union raises concerns over the durability of these benefits and therefore how the trade agreement will evolve.
“This, alongside a realisation that an economic slowdown is gathering pace, helps explain why Northern Ireland manufacturing has gone from the most optimism sector to the most pessimistic in the space of one month.”
The Ulster Bank PMI is compiled by S&P Global using responses to questionnaires sent to a panel of around 200 private sector companies in the manufacturing, construction, retail and services sectors.
In June manufacturers saw orders slump at their fastest pace — outside of lockdown — since April 2009.
As the cost-of-living crisis continues, severe price pressures have caused demand to contract significantly.
Falling activity was seen across all the main economic sectors.
Similarly, new orders decreased at a much sharper pace at the end of the second quarter.
Although both input costs and selling prices increased at weaker rates than in May, the respective rates of inflation remained among the fastest on record.
Growing inflation and higher costs for energy, fuel, shipping and wages were all widely reported, alongside supply chain disruption.
“Supplier delivery times continued to lengthen in June but at the slowest pace since the question was first asked 16 months ago,” Mr Ramsey added.
“Clearly, an economic slowdown, by reducing demand, should help to ease supply chain disruption further in the year ahead.”
Economists anticipate worsening figures with expectations that customers will scale back their spending plans amid rising costs.