Weak sterling helps Northern Ireland services sector to be strongest in UK
Sterling weakness is helping Northern Ireland's services firms to outperform the sector in the rest of the UK, it's been claimed.
Ulster Bank chief economist Richard Ramsey said output in the sector here - encompassing everything from restaurants to estate agents - has been stronger than anywhere else in the UK.
He said the province's proximity to the eurozone could be enabling the sector to receive a boost as the weakening sterling makes services better value to visitors from the Republic.
UK-wide, activity in the services sector sunk to its lowest level in nearly a year last month.
The closely-watched Markit/CIPS services purchasing managers' index (PMI) showed a reading of 53.2 in August, down from 53.8 in July and slightly below economists' expectations of 53.5.
Mr Ramsey, who monitors sectoral performance in the economy as part of the monthly Ulster Bank Northern Ireland PMI, said: "May to July's Northern Ireland service sector output was outperforming its UK equivalent.
"Indeed, Northern Ireland's services sector has been the fastest growing sector in the Northern Ireland economy (according to the PMI) whereas in the UK it is manufacturing.
"Northern Ireland is arguably getting a bigger boost from the exchange rate in its services sector given the land-border with the eurozone/Republic of Ireland. Meanwhile, Northern Ireland's tourism industry continues to break records and go from strength to strength.
"While the weather for August was uninspiring I suspect the local services sector will have fared much better."
Meanwhile, the UK Markit/CIPS report PMI report said slow growth in new business sent activity in the dominant industry to its lowest level since September 2016 during August.
Inflationary pressures were also biting across the sector, with the Brexit-hit pound ratcheting up input costs to a six-month high. Sterling was marginally down against the US dollar at 1.292 following the update, but the pound was 0.1% ahead versus the euro at 1.087.
The outcome adds to a mixed performance from the UK economy, with output at UK factories unexpectedly pushing to a four-month high in August, while the construction sector slipped to a one-year low for the month.
Chris Williamson, chief business economist at IHS Markit, said the services sector had put the UK economy on course for third-quarter growth of 0.3%, the same rate as the second quarter.
He said "a summer slowdown was evident in the economy".