Services drive Northern Ireland business growth

Services drove a fourth successive month of business growth in Northern Ireland in May, a new report shows.

The Ulster Bank Northern Ireland Purchasing Managers’ Index (PMI) says the region enjoyed further growth last month, but the actual pace of expansion slowed.

The headline index hit 51.8 in May. Any reading above 50 indicates expansion while any result below that benchmark shows a contraction.

May’s outcome was lower than the 53.1 recorded in April, indicating that while growth continued last month, it did so at a slower pace.

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Services were responsible for all the growth, with retail and construction joining manufacturing in a downturn, according to Richard Ramsey, chief economist Northern Ireland, Ulster Bank.

Employment also continued to rise “solidly”, says the report. But the rate at which businesses hired workers eased in May.

Mr Ramsey noted that the North’s private sector notched up its fourth successive month of growth, even though the rate was the slowest in some time.

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He said that new orders maintained the same modest growth as in April.

“A welcome slowdown was also evident in inflationary pressures, with input cost and output price inflation easing to its weakest level in around 2½ years,” said Mr Ramsey. “There were some reports of energy prices coming down, with ongoing inflation linked to higher wages.”

Services posted the strongest growth in new orders, followed by retail, which continued recruiting despite the likely end of recent expansion.

“Meanwhile the slump in construction orders continued and is approaching two years of continuous decline, but again construction firms are increasing staffing to address long-standing skills gaps,” said Mr Ramsey.

“Encouragingly, all four sectors expect growth in business activity in 12 months’ time, with manufacturing the most optimistic and retail the least. But firms said that hikes in interest rates and political stagnation have been impacting on growth and cuts in public expenditure are also a concern,” added Mr Ramsey.