Business

Northern Ireland economic growth slows down

Economic growth slowed down last month, according to the latest PMI
Economic growth slowed down last month, according to the latest PMI Economic growth slowed down last month, according to the latest PMI

THEr rate of growth in the Northern Ireland economy slowed for the second month running May.

The latest data from the closely watched Ulster Bank Purchasing Managers' Index (PMI) found the growth of output had eased to a nine-month low.

The statistics, produced by Market, also showed employment increased at a weaker pace during the month.

Growth was also slower than seen across the UK economy as a whole. Where output increased, this was linked by panellists to strengthening market conditions and favourable weather.

New business was little-changed in May, following solid growth in recent months. New orders increased in the manufacturing, services and retail sectors, but fell sharply at construction firms.

New export orders increased for the fourth month running, but the rate of expansion was only slight and the weakest in the current sequence of growth.

A lack of new business contributed to a first reduction in backlogs of work in seven months during May. As was the case with activity, growth of employment at Northern Ireland companies eased. Although rising for the 16th successive month, staffing levels increased at the slowest pace since last September.

Where job creation was recorded, panellists mentioned positive expectations and company expansion plans.

Input prices continued to rise sharply in May as the impact of the introduction of the National Living Wage continued to push up staff costs and some firms noted higher fuel prices. That said, the rate of inflation eased slightly from April’s 24-month high.

Manufacturing posted the fastest rise in input prices of the four monitored sectors.

Output prices increased for the seventh consecutive month, with the pace of inflation quickening to the fastest since February.

Ulster Bank's chief economist in the north Richard Ramsey said Northern Ireland's "brief period of out-performing the UK as a whole appears to have come to an end".

"Local firms continued to report rising levels of activity and job creation, but a significant slowdown has been in evidence," he said.

"Indeed, Northern Ireland reported the sharpest slowdown of all the UK regions last

month, with the rate of growth in business activity and employment easing to nine-month and eight-month lows respectively."

Mr Ramsey said however that there had been contrasting performances at a sectoral level.

"The sharp slowdown in business activity, new orders and employment growth is largely attributable to a marked deterioration in business conditions within the construction sector," he said.

"Locally-owned construction firms reported the fastest rate of decline in business

activity since March 2013. The dramatic fall in new orders in April accelerated in May, with the rate of decline the steepest since November 2012. Construction firms also cut their staffing levels for the first time in eight months. A marked slowdown in the GB construction market appears to have hit local firms hard.

“Outside of construction, the manufacturing industry reported a further decline in both output and employment levels in May."