Belfast Telegraph

Tuesday 21 October 2014

Construction sector's expansion builds on economy

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

The construction sector has been described as "the star performer" in the latest report on Northern Ireland's improving economy. July data from the Ulster Bank's purchase manager's index also said that firms took on extra staff at a solid pace, marking the 13th consecutive monthly rise in employment among responding companies.

But the rise in employment was the weakest since February and slower than that in the UK as a whole. There was a further sharp expansion of private sector output in Northern Ireland and new order growth quickened slightly with respondents reporting improving economic conditions at home, as well as across the UK.

The construction sector posted the fastest increase in new business during the month, with the pace of expansion hitting a post-crisis high.

Meanwhile, new export orders rose at a solid pace, with panellists highlighting the strength of demand from the Republic of Ireland.

Northern Ireland companies posted another strong rise in input costs during July, with the rate of inflation much quicker than the UK economy average.

The pace at which input prices increased quickened for the second month running, with construction firms recording the fastest increase in input prices.

A slight rise in output prices was recorded in July.

Richard Ramsey, Ulster Bank's chief economist in Northern Ireland, said that Northern Ireland continues to benefit from improving economic conditions in the Republic of Ireland, its largest export market. He said that the growth in the construction sector was attributable to rising levels of work outside of the region.

"The construction sector was again the star performer in terms of growth momentum," he said.

"In relation to the construction sector, the strong growth in output does not necessarily relate to work being done in Northern Ireland, as many local construction companies have been expanding their workloads elsewhere, particularly Great Britain."

He added: "Positive news emanated from the labour market again in July, with employment now having risen in 13 successive months. The rate of job creation has eased off somewhat through the summer, but the continuing strong rates of growth in new work and further rises in backlogs should mean that firms will keep on adding to their staffing levels in the near-term at least."

Construction's strong growth was closely followed by retail, according to the PMI. The survey also said rates of growth in the manufacturing and services sectors had quickened.

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