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Confidence plummets in Northern Ireland business due to political uncertainty


Ulster Bank chief economist Richard Ramsey

Ulster Bank chief economist Richard Ramsey

Ulster Bank chief economist Richard Ramsey

Business activity in Northern Ireland continued to grow modestly in February though confidence has hit a seven-month low, according to a report today.

February's Ulster Bank Purchasing Manager's Index showed that business activity was at 56.3 last month, down from 58.7 in January. Any figure above 50 indicates growth.

But optimism about the year ahead, including the prospect for new orders and growing employment, was at a seven-month low - with Ulster Bank chief economist Richard Ramsey saying political factors could be weighing on business.

Nonetheless, Northern Ireland firms managed to record a faster increase in output in February than the UK as a whole.

But Mr Ramsey said that despite business growth continuing, there were "clear indications of a slowdown". "Inflationary pressures intensified again with input costs rising at their fastest rate in nine months," he added.

Where activity rose, firms linked this to higher new business and improving client demand. All four sectors - construction, retail, manufacturing and services - all reported expanding activity, led by retail.

New product launches and marketing helped firms to secure new business, marking 16 months of consecutive growth. However, the rate of expansion was the slowest since July last year.

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Firms were also battling higher costs for fuel, raw materials and staff.

Retailers posted the sharpest increase in cost burdens, followed by manufacturing firms. Firms continued to increase their workforce in February - a trend that has been continuing for more than three years - although the pace of job creation eased.

Manufacturing and services firms experienced the biggest slowdown in their rates of hiring, the latter slowing to an 18-month low. The manufacturing sector has been hit with significant job losses over the first few months of the year.

Mr Ramsey added: "While the numbers suggest the local private sector continued to grow, there were indications of a slowdown, with a dip in optimism about the year ahead evident.

"With the prospect of trade wars between Europe and the US, alongside the uncertainty about a range of political issues, this is perhaps to be expected.

"Indeed it would be unsurprising if this trend of easing back further from the multi-year highs at the start of the year continued in the months ahead."