Northern Ireland economic growth buoyed by thriving export market
Exports led the way in May as business growth picked up for Northern Ireland companies at the fastest rate in three months, according to a survey.
But construction firms here were left feeling the impact of the political impasse as decisions on big projects were held up due to the lack of an Executive.
However, the Ulster Bank purchasing managers index (PMI) for June said the most positive trend had been a continued increase in exports, growing at their fastest rate over the year and well above the long-term average.
At 55.1, up from 53.5, output growth as reflected in the overall business activity index was also sharper than the UK average.
Among sectors of business, the services sector - which covers everything from restaurants to estate agents - was the star performer and enjoyed the biggest rise for the second month in a row.
Ulster Bank chief economist Richard Ramsey said firms were "capitalising on buoyant export markets, most notably the Republic of Ireland and the US, as well as the favourable exchange rate".
But he added that sluggish growth was persisting in the UK, affecting firms focused on the domestic market.
"On the other hand, the UK is one of the slowest growing economies in Europe, which means that those Northern Ireland firms focused on the domestic market are faring less well. Construction orders, for instance, saw just marginal increases, while retailers saw new orders stagnate. Indeed, firms in these two sectors are the least optimistic with regard to the 12-month outlook, and retail confidence is at a 13-month low."
He said that the lack of an Executive was likely to weigh down on sentiment for building firms for the foreseeable future.
Mr Ramsey added that price rises were hitting the retail sector, squeezing profitability and consumers' spending power.
"More broadly, inflation remains a key challenge across the board, with service sector firms seeing input cost inflation rising at the fastest rate in more than seven years, driven by wage pressures," he added.
"As a consequence, they are increasing their prices/fees more quickly than at any time since 2008."
But despite the challenges and uncertainty, he insisted overall optimism was still relatively strong.
"Almost a third of firms surveyed expect to expand their business in the year ahead, three times more than the number expecting a decline," he said.