Strengthening pound hits NI manufacturing exports
Manufacturing exports from Northern Ireland "weakened considerably" in the second three months of 2014, according to a report.
The latest economic survey from the Northern Ireland Chamber of Commerce and Industry said the province was second lowest of the UK regions for manufacturing exports, with businesses citing the strength of sterling as an increasing concern.
Sterling reached a six-year high last week, and 36% of manufacturing businesses in Northern Ireland have said the highs are a major worry as the strong pound makes their goods more expensive to buy for overseas customers.
Ann McGregor, chief executive of the Northern Ireland Chamber, said that she is extremely disappointed by the noticeable fall in the export balances.
"The concern over currency volatility won't come as much of a surprise with businesses fearing that sudden currency shifts could mean the difference between trading at a profit and a loss," she said.
"Businesses are certainly right to be cautious but managers should not allow currency concerns to inhibit growth abroad.
"Hedging against currency fluctuations is a fairly straightforward operation and should form part of any export strategy."
The survey questioned just over 300 companies here, representing around 4% of the total number of respondents from across the 12 UK regions. The top 10 manufacturing companies in Northern Ireland account for half of our exports.
The survey says that there has been an improvement in domestic sales and orders for manufacturing, but that Northern Ireland ranked third from bottom of UK regions for business confidence levels.
The cashflow balance for the manufacturing sector has improved considerably and business costs are less of an issue from the last quarter, reflecting lower inflation and cheaper imports given sterling's six-year high against the dollar and 18-month high against the euro.
Concerns were also expressed about recent comments from the Bank of England suggesting that an interest rate rise is imminent, with Maybeth Shaw, partner at BDO, saying that the uncertainty was putting businesses off from expanding or borrowing.
The survey also revealed that 73% of the businesses polled have experienced rising costs resulting from business regulation compliance over the last five years.
The most burdensome regulations were rated as health and safety at 41%, employment at 35% and direct taxes at 33%.
The Northern Ireland Executive is currently undertaking a review of business red tape in Northern Ireland with the aim of looking for ways to reduce the regulatory burden on local businesses.