Northern optimism bucks the trend in UK business

MANUFACTURERS in the Northern Ireland are more optimistic about future business conditions than their counterparts in Britain, according to the Confederation of British Industry.

The CBI's latest Regional Trends Survey reveals a continuing increase in manufacturing employment, in contrast to the downward trend in Britain.

The CBI believes the percentage increase in manufacturing employment over the 12 months of the survey will be the fastest in the UK. But the growth in optimism among Northern manufacturers has been slower than during the last four months of 1995.

Export orders have been stable and manufacturers expect further strong increases in the months ahead. But domestic orders have declined in recent months and further reductions are expected over the next four months.

Manufacturers in Northern Ireland report strong increases in output over the past four months - against the UK trend - surpassed only by firms in the East Midlands.

As a result, below capacity working is reported to be the lowest in the UK. But orders have failed to come through and firms report stocks of finished goods increased rapidly over the past four months.

Output expectations over the coming four months are for marginal growth. Although unit costs increased moderately over the past four months, these increases are not expected to persist over the next four months.

Both domestic and export prices have risen to accommodate the increase in unit costs.

Export price rises have been even greater than domestic prices, reflecting manufacturers' bullish export sentiments. But perhaps the most positive indicator of the swelling optimism among Northern manufacturers comes from boardroom decisions on investment.

Expectations about demand have prompted firms to think about future capacity constraints and, for the first time since 1991, they expect to increase investment in buildings. Firms are less concerned about increasing efficiency and replacement, and have become more concerned about capacity expansion.

Investment in plant and machinery is also expected to increase over the coming year, the first reported increase for over a year.

Only around one third of firms report uncertainty in demand as a factor which will limit investment while inadequate net return on investment remains the most important constraint.