Business recovery slows as rates rise and storm surge ‘limits growth’
Yesterday at 13:28
Northern Ireland’s private sector recovery is slowing, with some companies saying rising interest rates and continued political stagnation are limiting growth here.
According to Ulster Bank’s latest Purchasing Managers Index, companies saw a slight increase in total output in May.
Growth in the private sector continued for the fourth month in a row, but that expansion slowed in May.
However, the growth rate of output and employment showed signs of easing, while new orders increased at the same pace as in April.
“While demand generally improved due to market confidence, there were some reports of rate hikes and political stagnation limiting growth,” the report said.
Richard Ramsey, chief economist Ulster Bank Northern Ireland, said: “Northern Ireland’s private sector posted growth in business activity for a fourth consecutive month in May, although it was the slowest growth rate in this span. Employment growth also slowed to a four-month low, but local businesses increased their workforce at the fastest rate of any UK region except Scotland. New orders maintained the same modest growth rate as April.
“A welcome slowdown was also apparent in inflationary pressures, with input cost and output price inflation declining to their lowest levels in about two and a half years. It is encouraging to note that inflationary pressures from NI are the least pronounced in the UK. There were some reports of declining energy prices, with continued inflation linked to higher wages.
“As far as sectors are concerned, the services sector was the only one to register an increase in business activity in May, with construction and retail joining production in contraction territory. The services sector also reported the strongest increase in new orders, followed by retail Retail’s recent purple patch of growth in sales and orders appears to be over, though retail is still recruiting hard.
“Meanwhile, the decline in construction orders has continued and is approaching two years of continuous decline. But again, construction companies are expanding workforces to address long-standing skills gaps.
Encouragingly, all four sectors expect business activity growth over 12 months, with manufacturing the most optimistic and retail the least. But companies said interest rate hikes and political stagnation have impacted growth and budget cuts on government spending is also a concern. None of these factors are expected to disappear anytime soon.”