Optimism grows as Northern Ireland recovery in sight
A new survey has suggested a slight recovery in the Northern Ireland economy but that the services sector is still facing challenges.
The British Chambers of Commerce's latest quarterly economic survey (QES) shows business optimism in the province was better in the fourth quarter of 2010 than in the third. The number of businesses reporting same or better cashflow this quarter has also increased.
Over one-third of businesses (36%) reported increased UK sales compared to 27% last quarter.
The number of Northern Ireland businesses which are exporting has increased and export sales are marginally rising.
Workforce expectations remain the same as last quarter, while 25% of businesses said they are operating at full capacity compared to 24% last quarter.
The Northern Ireland survey also revealed that over twice as many businesses are trying to employ full-time staff than part-time staff, with the most difficult jobs to recruit being professional and managerial, closely followed by clerical.
Competition remains the biggest concern for businesses, with taxation the second biggest concern followed by exchange rates.
Ann McGregor, chief executive of the Northern Ireland Chamber of Commerce, said signs of improvement in the manufacturing sector give great optimism that it can drive sustainable economic recovery, with both domestic and export results being stronger than the national result.
"Cashflow is still tight and raw materials are adding to price pressures, but there is a reasonable degree of confidence that turnover and profitability will improve," she said.
"The picture for the services sector is in stark contrast to the manufacturing sector, with negative export balances and poor prospects for employment. Capacity is under utilised which appears to be putting downward pressure on prices. All in all, the results point towards a challenging 2011 for the service sector economy."
The overall study suggests that the UK economy has continued growing in the fourth quarter of 2010, but at a slower pace than in the second and third quarters.
David Frost, director general of the British Chambers of Commerce, said that UK businesses have witnessed some of the toughest years in recent memory.
The survey signalled gross domestic product growth slowing to around 0.4% or 0.5% in the final three months of last year.
This would be a marked slowdown on the 0.7% recorded in the third quarter and comes after a "disturbing" recent performance from the services sector, compounded by last month's Arctic conditions.