Private sector's recovery lagging
Northern Ireland's economy has failed to latch on to the recovery being experienced elsewhere in the UK, according to a worrying new report released today.
The latest Ulster Bank PMI report shows that Northern Ireland's private sector is struggling to recover from the adverse economic conditions that have characterised the last two-and-a-half years. Its business activity index fell to a three-month low of 46.3 in May from 47.5 in April - with new orders falling, costs rising and continued job shedding.
The report is unwelcome news coming as it comes ahead of the Government's emergency Budget next week, which will detail the severity of public spending cuts to be imposed on Northern Ireland.
Ulster Bank economist Richard Ramsey, said the majority of the survey's indicators signalled further deterioration in economic conditions in May.
"The divergence in economic performance between Northern Ireland and the rest of the UK continues, with Northern Ireland the only region still experiencing declining levels of output," he said.
"At a sector level, the divergence in performance is most apparent within the construction and service industries. There is no sign of them stabilising any time soon, with new orders continuing to fall at a rapid rate in May."
Outside of the public sector, Mr Ramsey said the services sector, alongside construction, will bear the brunt of the forthcoming public expenditure cuts. While manufacturing orders finally begun to pick up in May, output still lags considerably behind the UK performance.
"Some manufacturing firms are experiencing a rise in export orders, but Northern Ireland's overall export performance remains extremely subdued.
The level of new export business fell to an eight month low, with almost 39% of firms reporting a fall in new export orders in May. Northern Ireland's reliance on the Republic of Ireland and falling demand is the primary factor behind this."
Average input costs rose during the month, at its fastest pace in 19 months, driven by high prices for raw materials. At the same time firms decreased their prices for the 12th successive month.