Construction industry sees fastest rate of growth in 12 years
The construction sector in Northern Ireland experienced its fastest rate of growth in 12 years during May, a bellwether business survey said today.
Builders and contractors suffered extensive losses in the economic downturn, with the sector haemorrhaging thousands of jobs as property values plummeted and the housing market ground to a halt.
But the Ulster Bank purchasing managers' index for May indicated that the suffering of the sector may be over, with construction experiencing its fastest ever rate of growth last month.
The good news was not limited to construction – private sector activity was up across the whole economy and staffing levels were also on the up in manufacturing, services and retail.
Ulster Bank chief economist Richard Ramsey said the construction industry's growth rate in business activity in May was the highest ever for any sector tracked by the survey.
But builders were not cracking open the champagne just yet.
"No sector of the economy experienced the record rates of decline that the local construction industry has experienced," Mr Ramsey said.
"Therefore what we are seeing is a period of catch-up from very low levels of activity. Indeed, the official figures show that the number of housing starts was still falling in the last quarter of 2013."
Other sectors apart from construction also experienced big improvements during May, according to the survey, with the highest increase in new orders ever recorded in the PMI, which began keeping tabs on business in 2002.
Mr Ramsey added: "The second quarter of the year is set to be even stronger than the first as far as Northern Ireland's private sector economic recovery is concerned.
"All sectors of the economy posted strong rates of growth in business activity and staffing levels in May – although the retail sector saw its rate of growth in business activity slow to an 11-month low.
"All sectors, bar retail, also reported an easing in input cost inflation last month."
Manufacturing also experienced another record month, recording the fastest rate of growth in employment since the series began.
"The sector breaking the most records though is the construction industry," the economist added.
The services sector, which embraces everything from restaurants and pubs to law firms and estate agents, was also seeing rapid expansion of output, new orders and employment.
"It is likely to have been helped, at least to some extent, by big events in May such as the Giro d'Italia and the three-day Balmoral Show," Mr Ramsey said.
The recovery was generally being driven by the strong rebound of the economy in Britain.
"This has been evident with new orders growth, which includes both domestic-bound sales and exports, consistently outperforming the export orders growth," he said.
But there was some evidence that the recovery which is being experienced in the Republic of Ireland – our biggest exporting market – was feeding through, as during May firms enjoyed their fastest rate of growth in export orders since the credit crunch began.
The purchasing managers' index survey is eagerly awaited as a reliable barometer of how the economy is performing. And the survey covering May, which is out today, contains good news all round.
However, the best news is reserved for the sector which has suffered the most in the economic downturn – construction.
During May, building firms experienced their biggest improvement in business activity ever.
But the long-suffering builders and contractors in Northern Ireland won't be celebrating just yet.
The improved activity in May compares with extraordinarily low activity during the worst of the downturn.