Belfast Telegraph

Tuesday 24 May 2016

Construction and retail woes as shops report sharp sales decline

By Margaret Canning

Published 11/05/2015

Ulster Bank chief economist Richard Ramsey
Ulster Bank chief economist Richard Ramsey

April was the fourth month in the last five in which business slowed down for Northern Ireland, with steep declines for construction and retail, a survey shows today.

The Ulster Bank's monthly purchasing managers index (PMI) said there had been modest decline in output and new orders across all sectors, after a growth spurt in March. Yet firms were continuing to increase staff numbers during the month.

However, overall business activity in Northern Ireland was much slower than all of the other UK regions.

Construction and retail were among the poorest performers, with shop-owners reporting their worst sales decline since 2012, and construction its lowest activity in two years.

Export performance also waned acutely during April thanks to the strong sterling - with no expansion in export order books since October last year.

Ulster Bank chief economist Richard Ramsey said: "The latest decline, although modest, confirms that Northern Ireland's private sector recovery has effectively stalled since November last year."

He said the results of the index suggested there had been no pick-up in new orders - in fact, all sectors except manufacturing reported falling orders.

Economic uncertainty was to blame, respondents to the survey said. But firms were still hiring - with all sectors reporting an increase in headcounts, except construction, where it was broadly flat.

Mr Ramsey said the headline performance for output and orders was disappointing but that there were contrasting performances at sector level.

"The fall in business activity was due to steep declines in construction and retail, which more than offset the respectable rates of growth within manufacturing and services.

"Last month, local retailers reported their sharpest decline in retail sales since May 2012.

"Meanwhile the construction sector posted its largest fall in business activity in two years."

Manufacturing remained the golden child, even though there had been a global manufacturing slowdown in April.

"Whilst global manufacturing output growth slipped to a 21-month low in April, Northern Ireland's manufacturing firms saw output growth rebound to a six-month high, after a recent soft patch.

"New orders also accelerated significantly in April to a six-month high.

"This would appear to be driven by demand in the Great Britain market, given that Northern Ireland's export orders, which are predominantly manufacturing, continue to fall."

He said the sterling/euro exchange rate would remain a major obstacle for exporters and cross-border retailers.

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