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Third month of growth driven by improving retail sector

By Margaret Canning

Published 10/08/2015

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

The economy grew in July for the third month in a row, with retail experiencing the strongest jump in new orders, the Ulster Bank purchasing managers' index said today.

Growth was slower than in the early and interim stages of economic recovery in 2013 and 2014 - but Ulster Bank chief economist Richard Ramsey said that could be a good thing.

"The current growth rates are more in line with those prior to the financial crisis, and are therefore potentially more sustainable," Mr Ramsey said.

Output and new orders were both up for the third month in a row, resulting in heavier backlogs of work and more job opportunities, the bellwether survey said.

Mr Ramsey added: "In fact, outstanding work either not completed or not yet started increased back-to-back for the first time since the third quarter of last year.

"As part of efforts to alleviate this, staffing levels were raised again, albeit at only a modest pace." There was a return to growth in retail, matching expansion in manufacturing and services - which encompasses everything from law firms to restaurants.

But the construction sector's performance was still underwhelming, with both activity and new orders slumping.

The strength of sterling against the euro was still a challenge to overcome for Northern Ireland businesses.

But the relative strength of the Republic as it benefited from the weakness of its currency also presented some opportunities for Northern Ireland - as did the improving UK economy.

Retailers saw the sharpest growth in new orders - though the sector saw staffing levels fall. However, staffing numbers were up in manufacturing and services firms.

And generally speaking, there was a weaker rise in employment in Northern Ireland than the rest of the UK.

Costs were going up, thanks to growing staff costs and increased raw material prices.

The relatively cheerful purchasing managers' index for July follows a more downbeat economic assessment from business advisers PwC.

Its economic outlook said recovery in Northern Ireland was slowing down, mainly thanks to low productivity levels.

It predicted economic growth of 1.8% for the year as a whole, compared to 2.2% in 2015.

Belfast Telegraph

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