Business

Northern Ireland private sector grows at faster rate

Manufacturing production returned to growth in December
Manufacturing production returned to growth in December Manufacturing production returned to growth in December

THE growth in the north's private sector continued to the end of 2015, according to the latest data.

The latest Ulster Bank Purchasing Managers' Index found output grew in December at its fastest rate for four months.

And this in turn saw companies taking on additional workers while the rate of cost inflation quickened to the fastest for a year.

The headline business activity index posted 52.3 in December, down marginally from in November but continuing to signal a solid expansion in private sector output.

Anything above denotes growth. Activity has now risen in each of the past eight months.

According to respondents, improving market conditions and rising new export business had contributed to the increase in activity. Manufacturing production returned to growth following a fall in November. Total new business rose for the eighth consecutive month in December.

The rate of growth also quickened for the second month running and was the fastest since August.

Higher new business led to a build-up of backlogs of work, the second in as many months. Northern Ireland firms increased their staffing levels for the 11th successive month during December. Three of the four monitored sectors posted higher employment, the exception being manufacturing.

Input prices increased at the fastest pace for a year at the end of 2015, with a number of respondents highlighting rising staff costs. The service sector posted the strongest rate of inflation, with the latest increase the fastest since April 2014.

Output prices at Northern Ireland companies rose for the second month running in December. The rate of inflation was slight and broadly in line with that seen across the UK economy as a whole.

Ulster Bank's chief economist in the north Richard Ramsey said the report showed the region's private sector "ended 2015 in better shape than it began it".

"Back at the start of last year, local firms were reporting falling levels of output, orders, exports and employment," he said.

"But Northern Ireland’s private sector has signalled rising employment every month since. Meanwhile, firms have notched up continuous expansion in output and new orders since April," he said.

“Overall, last year can be viewed as a game of two halves. The first six months of the year were disappointing, with marginal growth in output, falling exports, and subdued rates of growth in orders and employment.

"However, the second half saw an acceleration in output, new orders and employment growth. Furthermore, exports returned to growth too. Inflationary pressures were also subdued in the first half of last year but have been picking up since."

Mr Ramsey said the report's findings were "encouraging" but added, "there are a number of significant risks on the horizon".

"Northern Ireland will not be immune to these challenges going-forward, alongside the ongoing fiscal austerity," he said.