Business

Beleaguered sectors showing improvement says economist

THE north's private sector edged closer to stability during May, according to a report.

The latest Ulster Bank Northern Ire-land purchasing managers' index (PMI) found that both activity and new orders falling only marginally over the month.

The bank's chief economist in the north Richard Ramsey said there was improvement in some of the most beleaguered of sectors.

"Firms within the construction and service industries, which have borne the brunt of the domestic downturn, reported a marked improvement in business conditions in May," he said.

The fall in activity during May was the slowest in the current 18-month sequence of decline.

Output across the whole of the UK however rose solidly with services activity increasing for the first time in three and a half years.

New business also fell at a weaker rate in May, with the rate of decline the slowest since November 2011.

Staffing levels, meanwhile, decreased for the fourth month running, albeit at a modest pace that was slower than in April.

The rate of input cost inflation at Northern Ireland companies remained marked, and was little-changed from recent months.

This contrasted with another slowdown in cost inflation at the UK level. Higher fuel and staff costs were be-hind the increase in input prices, according to panellists.

Manufacturing posted the fastest rise in input costs during the month. In response to higher input prices, Northern Ireland companies increased their output prices in May.

"The most encouraging news was the fact that Northern Ireland's services sector, the economy's largest sector, posted its first rise in business activity in three and a half years," Mr Ramsey said.

"Furthermore, service sector firms reported their first rise in new orders in over five years. This acts as a reminder that output and activity can not keep falling indefinitely."

"The construction sector is now the only sector awaiting a return to growth. However, the construction industry reported a significant slowdown in the rate of decline in activity and new orders.

"Indeed, last month was the slowest rate of decline in 37 months. Meanwhile, the rate of job losses within the sector has almost stopped.

"The improvements within the construction and services sector appear to chime with anecdotal evidence of improving signs within the property market."

However, Mr Ramsey warned that activity across all sectors remains "at very low levels and recouping the output and jobs lost in the recession will be measured in years not months."

? 'ENCOURAGING NEWS': Ulster Bank chief economist Richard Ramsey