The decline in Northern Ireland business activity slowed significantly last month but the economy has still not started to expand, according to a new report released today.
The monthly Ulster Bank purchasing managers index (PMI) report showed business activity declined — but at the slowest rate so far in 2010.
The index for the province stood at 47.1, up from 42.4 in February, but below the 50 mark that indicates growth for the 28th straight month.
Richard Ramsey, chief Northern Ireland economist at Ulster Bank, said: “The March PMI signalled the largest monthly improvement in the business activity index in 10 months.
“This would appear to support the view that a significant portion of the renewed private sector weakness in January and February was indeed weather-related.”
The survey found that a dearth of new orders was the primary concern among local firms, with the level of new business falling once again for the 28th month in succession. While input prices paid for the likes of fuel, plastic and steel rose again, firms continued to discount their own prices,” said Mr Ramsay.
Overall, Ulster Bank said the first quarter of 2010 was significantly weaker than the last three months of 2009 and marked the worst quarterly performance, in terms of new orders and business activity, since early last year.
“Those firms exposed to international markets are benefiting the most from the global recovery. This is most evident within the manufacturing sector with local firms posting their strongest rise in new orders since June 2007.
“This increase has spurred some firms into re-hiring staff. Not surprisingly, the construction sector, which has already lost over a quarter of its workforce since the downturn began, continues to shed workers at a rapid rate,” said Mr Ramsey.
But the outlook for the service sector remains extremely challenging, he said.
“The pace of decline in new orders for service sector firms has accelerated for the last four months to March.
“Looking ahead, those firms reliant on the public sector, the local construction industry or the Republic of Ireland are particularly vulnerable.”