Modest acceleration in business activity growth in April

The new data comes with the release of the Ulster Bank Northern Ireland PMI which suggests that, despite subdued demand pressures, backlogs of work increased further, prompting firms to hire additional staff.

In line with a strong and accelerated rate of input cost inflation, businesses reported a further marked increase selling charges.

“The March PMI saw a slowdown in growth resulting from factors including the Beast from East weather episode and it was anticipated that there would be a rebound in April,” said Ulster Bank chief economist for Northern Ireland Richard Ramsey.

“The latest report shows that this has indeed come to pass. However it has been a more muted one than expected in Northern Ireland and the UK as a whole, unlike the Republic of Ireland which has rebounded with vigour.

“This suggests that the slowdown in Northern Ireland is related to underlying issues, rather than just a weather-related blip.”

In terms of the sub-sectors, Mr Ramsey said services had been the fastest growing in April, but still at well-below its pre-downturn, long-term average.

Manufacturing, in contrast, was holding up well relative to its long-term average and despite slowing last month.

Construction, however, saw business activity close to stagnation and order books falling for the second month in a row, while retail had seen a “significant” slowdown in activity and new orders since the turn of the year, whilst inflationary pressures have been soaring.

“Despite lower than expected business activity growth, there has actually been a surge in business optimism for the year ahead, driven by rising confidence within manufacturing and services,” Mr Ramsey added.

“Indeed, retail was the only sector to report a slide in business confidence for the year ahead. Linked to this is the strong export performance highlighted in the latest report, with export markets continuing to be the main source of growth, and export orders growing significantly faster than domestic orders.

“With manufacturers more exposed to international markets and retailers, as well as construction firms, much more reliant on the domestic market, this helps explain the differential in confidence within the sectors.”