Manufacturing boost...but is recovery on way?

By Margaret Canning – 10 December 2012

Manufacturing is providing a ray of hope amid the gloom pervading in the Northern Ireland economy, according to a major monthly survey.

The Ulster Bank Northern Ireland purchasing managers' index (PMI) for November found business activity was still falling, with output plummeting in each of the last 12 months.

Construction and services were the most stricken sectors - but it reported that new orders were down steeply and staff levels were falling, though at the slowest rate in seven months.

Continuing a trend of over three years' duration, the costs of running a business were also up - with many reporting higher fuel costs - but firms were still having to cut their prices because of strong competition.

But Ulster Bank chief economist Richard Ramsey revealed there was a silver lining, thanks to good news from the manufacturing sector.

He said: "All sectors reported a decline in business activity last month, but at a sector level, the ongoing difficulties are largely concentrated within the construction and services industries.

"Northern Ireland's manufacturing sector is showing some notable signs of improvement, with manufacturing firms notching up a second successive monthly rise in new orders. This appears to chime with a number of high-profile announcements from our flagship exporters in recent weeks. "The latest PMI survey also signalled a rise in manufacturing employment levels and the fastest rate of growth in 12 months."

Bombardier Aerospace (above), which employs 2,000 people in Belfast, recently announced two major orders for 142 global jets from Swiss firm VistaJet and 40 regional jets for American airline Delta.

Montupet, which employs over 550 people in Dunmurry, also announced a £200m deal to produce parts for the Ford Motor Company last month.

While firms in the service sector, which encompasses retail and business services, could not replicate such successes, they did report the smallest fall in staffing levels in over a year during November.

However the leading economist added: "The service sector needs a notable pick-up in demand if 2013 is to see employment levels on the rise again. Furthermore, all sectors will be hoping for inflationary pressures to ease to reduce the ongoing squeeze on profit margins."

Northern Ireland's fall in activity contrasted with a slight pick-up at UK level.