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May resurgence boosts trade and gives economy a spring

By John Mulgrew

Published 08/06/2015

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

Northern Ireland businesses witnessed a resurgence last month, buoyed by boosts in manufacturing and the services sector.

May also saw good news on the jobs front - with a majority of firms here taking on new staff, according to the Ulster Bank's latest purchasing managers index (PMI).

Overall output grew at its fastest rate since October last year.

However, the construction and retail industries were both down in May, the latter posting the weakest reading of all sectors and its ninth consecutive monthly decline. And "worryingly", it was the construction sector's weakest month for new orders in more than two years.

But the latest survey "offers encouragement after a disappointing start to the year," said Ulster Bank chief economist Richard Ramsey.

He said the survey provided "comfort in relation to the resilience" of the private sector here.

"Indeed, Northern Ireland's private sector reported its fastest rate of growth in business activity and new orders during May in seven months.

"Furthermore, firms have continued to increase their staffing levels at a faster rate than the long-term average prior to the downturn."

But Northern Ireland's fortunes across the sectors still lag behind the UK as a whole, with Scotland the only region which posted lower levels of growth last month.

"Despite these encouraging signs, it is noted that the pace of Northern Ireland's recovery continues to lag behind the UK as a whole, and most of the UK regions, in all of these measures," Mr Ramsey said.

"The headline indicators also conceal significant variation in performance by sector, and indeed within certain markets. Northern Ireland's recovery in new orders is linked to increased demand within the UK market." Northern Ireland's manufacturing industry led the way in May - with new orders accelerating strongly, well above the "long-term pre-2008 average".

Currency is still hampering trade from abroad, with new business seeing a drop "reflective of the strength of sterling against the euro". Export orders fell for a fifth successive month in May.

It has become a greater concern in the last three months, with an increasing number of firms citing exchange rates as a major worry.

Meanwhile, new business "also rose solidly" in May following a slump a month earlier. In regard to employment, the survey said "anecdotal evidence" suggested more new business was the main reason for a rise in job numbers, "with approximately twice as many panellists taking on extra staff".

But the rate of input cost inflation - which includes things like energy - rose at its fastest this year, also outpacing the average increase in the UK as a whole.

Overall, Mr Ramsey said the latest survey was encouraging for Northern Ireland business.

"When it comes to more forward-looking indicators, new business activity gives some encouragement for the months ahead, with new orders rising at their quickest rate in seven months."

Belfast Telegraph

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