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Economy bouncing back, says index

Published 08/06/2015

Northern Ireland's economy is recovering again after a spring slowdown, figures suggest
Northern Ireland's economy is recovering again after a spring slowdown, figures suggest

Northern Ireland's economy is on the road to recovery again after a springtime slowdown, new figures suggest.

More businesses reported growth in both output and new orders last month than those that did not, according to the Ulster Bank's Purchasing Managers' Index (PMI).

The index, which provides a benchmarked snapshot of the economic outlook, also found an increase in staff being hired in May.

Ulster Bank's chief economist in Northern Ireland Richard Ramsey welcomed the findings.

"The latest survey offers encouragement, after a disappointing start to the year, with firms now reporting a significant improvement in business conditions," he said.

"Indeed, Northern Ireland's private sector reported its fastest rate of growth in business activity and new orders during May in seven months. Furthermore, firms have continued to increase their staffing levels at a faster rate than the long-term average prior to the downturn."

Mr Ramsey cautioned that Northern Ireland's rate of recovery still lagged behind most other UK regions. He also highlighted continuing problems for exporters when it came to trade with the Eurozone, due to the relative weakness of the euro against sterling.

"Northern Ireland's recovery in new orders is linked to increased demand within the UK market, as the strength of sterling vis-a-vis the euro continues to present a challenge for those exporting into the eurozone," he explained.

"Indeed, export orders fell for the fifth month in a row in May and have now been flat or falling since October 2014.

"The manufacturing sector is the brightest spot in the May survey, posting a fourth successive monthly rise, and the fastest in seven months. Services also performed relatively strongly, with its fastest rate of growth since the end of last year.

"The same cannot be said for the construction and retail sectors though, with construction experiencing a third month of falling output, and retail posting the weakest reading of all sectors, and its ninth consecutive monthly decline.

"When it comes to more forward-looking indicators, new business activity gives some encouragement for the months ahead, with new orders rising at their quickest rate in seven months."

Summing up the index findings, the economist said: "Overall, with the Northern Ireland economy experiencing a range of challenges, notably an unfavourable euro exchange rate and public spending cuts, as well as considerable uncertainty ahead, the latest Ulster Bank PMI provides some comfort in relation to the resilience of the local private sector.

"It remains to be seen what the full extent of public spending cuts on the private sector will be and how long growth can be sustained."

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