Belfast Telegraph

Mixed fortunes as Northern Ireland construction grows while retail suffers

By Jamie Stinson

Northern Ireland manufacturers and construction firms have begun to see the green shoots of recovery, while the rest of the private sector has suffered the third successive month of falling output.

A drop in retail trade was the leading factor in the decline, as shoppers crossed the border to take advantage of the strength of sterling against the weak euro.

The latest Ulster Bank purchasing managers' index (PMI) report found, after a fall in output during January, the manufacturing and construction industries saw a rise in February.

It comes as the Federation of Master Builders (FMB) is calling on the Executive to try and stem the tide of workers moving to Great Britain.

It wants politicians to commit to higher levels of capital spending and to ensure projects already announced go ahead, in a bid to stop construction workers moving abroad.

Meanwhile, businesses overall recorded an increase in employment numbers last month, reflecting the latest unemployment figures which showed the Northern Ireland claimant count had fallen for the 25th month in a row.

The rate of job creation saw its sharpest rise in six months in February - the biggest increase in construction.

For the first time in the last four months, staffing levels in the manufacturing sector rose. However, after 19 months of growth in the services sector, there was a slight decline in output.

Ulster Bank chief economist Richard Ramsey said that, behind the headline figure of falling output, there remain positive signs.

"Beneath this headline, there were signs of improvement relative to the January report," he said.

"February's report confirmed that firms' order books were growing again and they were adding to their staffing levels. Furthermore, the manufacturing and construction sectors returned to growth following a brief period of contraction."

However, fears for the struggling retail sector increased, with staffing levels falling again as shoppers headed across the border.

"Local retailers have signalled falling output since last September," Mr Ramsey said.

"Clearly, with sterling trading at its highest level against the euro since late 2007, retailers will be experiencing low levels of cross-border trade.

"Conversely, the retail and hospitality industry along the border in the Republic of Ireland will be benefiting from increased custom from Northern Ireland consumers."

Ann McGregor, chief executive of Northern Ireland Chamber of Commerce and Industry, said falling output in the private sector is a concern, with skills shortages and the weak euro being heavy influences.

"The fact that private sector firms are reporting their third successive month of falling output is concerning," she said.

"It does, however, mirror the NI Chamber survey that highlighted how businesses are still cautious around investment."

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