Northern Ireland private sector growth outpacing UK as cheap sterling fuels exports
Northern Ireland business activity is outpacing the UK as a whole with exports and sales fuelled by a cheap pound, according to a survey today.
Firms here reported faster rates of growth than the UK average, boasting an eight-month high, according to the Ulster Bank purchasing managers index (PMI) for August.
And Northern Ireland's exporters are benefiting from continued cheap sterling, with sales up outside the province.
Exports to the Republic helped support a rise in workloads, while new export orders rose markedly, due in part to the weakness of sterling against the euro.
All sectors saw an upsurge in output, led by the services sector, which posted the fastest expansion in 17 months.
Meanwhile, job creation is also on the rise, buoyed on by a strong retail sector.
"The successful filling of vacancies was also mentioned by some respondents, helping to lead to the 31st successive monthly rise in employment. Manufacturing was the only sector to buck the overall trend," the survey said.
And it "would appear that Northern Ireland is benefiting from the robust recovery in the eurozone", according to Richard Ramsey, Ulster Bank chief economist.
"Northern Ireland firms are taking advantage of having one of the fastest growing economies in Europe - the Republic of Ireland - on its doorstep," he said.
"Throw a weak currency into the mix and the conditions are ideal for local firms selling into the Republic/eurozone market.
"While Northern Ireland saw an eight-month high in the rate of business growth, UK firms posted the slowest rate of expansion in six months. The fact that London and the South East are not acting as the traditional dynamo of the wider economy is a major factor.
"All sectors saw their rates of business activity rising in August. Services though was the stand-out performer," he added.
"Indeed, its output and employment hit 17-month and 41-month highs respectively.
"Although activity in the construction sector grew, it was only marginally. Meanwhile manufacturing and retail both rebounded from their recent lows, with sterling's weakness acting as a tailwind in both sectors, for now."
However, Mr Ramsey said inflation remains a major challenge for business.
"Indeed, construction saw the fastest rise in input cost inflation in eight months. Firms appear to be passing their rising costs on to their customers with the price of goods and services rising across all sectors," he said.
"Looking ahead, the robust rates of growth in new orders across most sectors bodes well for the months ahead. However, inflationary pressures will act as a break on consumer spending in the domestic market.
"And longer-term economic prospects are clouded by political uncertainty on a number of levels."