Belfast Telegraph

Business recovery: December blues halts Northern Ireland improvement

By Margaret Canning

Northern Ireland's business recovery slowed in December and brought 17 months of improvement to a halt, it has been claimed.

According to today's purchasing managers' index from the Ulster Bank, output dropped in the main sectors of manufacturing, construction, retail and services.

Employment and activity in both retail and manufacturing fell in December, company bosses told the monthly survey - though employment rose in services and construction. Some managers simply said demand had slowed down from October to December.

Ulster Bank chief economist Richard Ramsey said 2014 could be split into two, with recovery accelerating in the first six months, before slowing down as it took hold in the second half.

He said: "Northern Ireland's private sector slowdown was particularly marked in the fourth quarter, with the rates of growth in business activity, new orders and job creation the weakest in the six quarter series of growth.

"Indeed, the latest monthly survey for December reveals that following 17 successive months of growth, Northern Ireland's private sector recovery effectively ground to a halt as far as business activity and employment growth were concerned."

But he said growth was slowing both in the UK and globally, and that December was unlikely to mark the start of serious deterioration for the region.

Instead, the relative health of both the UK and Republic should pull Northern Ireland's economy along, Mr Ramsey said.

Stephen Kelly, the chief executive of lobby group Manufacturing NI, said the growing strength of sterling was causing problems.

"One food company I know lost out on a £50,000 deal because a southern competitor could do it more cheaply because of the weaker euro.

"In any industry where margins are tight, such as food, currency is making a big difference."

John Armstrong, managing director of the Construction Employers Federation (CEF), said construction output in Northern Ireland itself had fallen in 2014. Instead, the industry showed "resilience" by picking up work in other parts of the UK and further afield. Companies which have sought out contracts in other parts of the UK include O'Hare and McGovern, and Lagan Construction Group.

Mr Armstrong said: "We estimate that of the £1.5bn combined turnover of our top 20 contractors, £1bn is now generated outside Northern Ireland, mainly in Great Britain.

"Whilst this is sustaining construction employment and benefiting the local economy, the constant travelling does place strains on families and there is a real risk of a long-term loss of skills from Northern Ireland as people are starting to settle in Britain."

He said, however, that the projects firms were carrying out across the water were not addressing the lack of new infrastructure and shortage of new housing back at home.

"These are two major economic challenges for 2015 and beyond," Mr Armstrong said.

Belfast Telegraph