Northern Ireland retail sector continues to expand while business activity and exports are on the rise
Export orders for Northern Ireland firms grew at their fastest rate in 12 years during 2016, according to a survey today.
And the Ulster Bank purchasing managers index (PMI) said business activity in Northern Ireland saw its fastest rise in nearly two-and-a-half years during December.
Retail was the biggest driver of a spurt in activity in the last three months of the year, with the sector expanding at its fastest rate since the PMI began 14 years ago.
And Ulster Bank chief economist Richard Ramsey said October to December brought the healthiest quarterly figures for export orders since the survey began.
Activity also picked up in the production and services sector, which covers everything from restaurants to estate agents.
However, activity fell in the construction sector - but at a rate that was less steep than previous months.
Mr Ramsey said currency had been a major contributing factor to business activity over the year. The pound has lost around 10% of its value against the euro and around 19% of its value against the US dollar since the EU referendum. Mr Ramsey said sterling weakness was "a key theme".
He said: "This has been largely responsible for the three key developments during the year - relating to exports, retail, and inflation."
And while the falling value of the pound had not been felt by shoppers for much of the year, Mr Ramsey said that by the end of 2016, cost inflation was making an impact. "The record rates of growth in export orders in H2 2016 has been accompanied by the strongest set of quarterly retail sales figures in the survey's 14-year history."
And demand from the Republic was fuelling both retail sales - as shoppers opt to come to Northern Ireland to spend their money - and export orders.
"As a result, Northern Ireland's retail sector continues to post the fastest rates of job creation of all the sectors," said Mr Ramsey.
"The downside of having a competitive exchange rate is import price inflation, and retailers and manufacturers have borne the brunt of input cost inflation.
"This is being passed on to consumers with retailers and manufacturers increasing prices in Q4 at their fastest rate on record."
He said the positive tone of the PMI would give momentum to business in 2017. But Mr Ramsey added that with growth being fuelled by retail performance, the momentum may not be sustained.
"Inflationary pressures and benefit freezes will act as speed bumps for consumer spending and economic growth this year.
"The economy also faces stiff political challenges at home and abroad.
"It appears that politics rather than the economy will be the number one priority locally, nationally and indeed internationally for the foreseeable future.
"Against this backdrop, the Northern Ireland economy will do well to avoid stagnation in 2017."