Business activity rises at fastest rate in a year-and-a-half

The services and retail sectors remain the 'star performers' of the economy
The services and retail sectors remain the 'star performers' of the economy

The Northern Ireland private sector ended the first quarter of 2016 on a high, with growth of both output and new orders accelerating.

That’s the main finding contained in the March data from the Ulster Bank Northern Ireland PMI report.

It indicates employment also continued to increase at a solid pace. On the price front, the rate of input cost inflation eased, while output prices were broadly unchanged.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said there had been a very stong start to the year aided by the fall in sterling against other currencies.

“Indeed, last month firms saw the rate of growth in business activity and new orders accelerate to an eighteen-month high, with export orders expanding at their fastest rate in 20 months,” he said.

“The marked depreciation in sterling over the last four months, linked to uncertainty with the outcome from the forthcoming EU Referendum, has provided a significant and unexpected tailwind for local exporters and retailers sensitive to cross-border footfall.”

Given the province’s reland’s reliance on the Republic of Ireland economy, he said the combination of strong growth there, coupled with a competitive sterling / euro exchange rate had presented many firms with very favourable conditions.

“It is noted that local firms also increased their staffing levels in March for the 14th month in a row.

Mr Ramsey said the report also confirmed that Northern Ireland’s private sector outperformed the UK in terms of output and employment growth in March, and for Q1 as a whole.

“Indeed, Northern Ireland’s private sector reported the fastest rate of growth in business activity of all the UK regions in March. It is worth remembering that the local economy is playing catch-up with its UK counterparts following a sustained period of underperformance.”

However, he said it was important to recognise that the encouraging headline performance concealed contrasting fortunes at a sector level with agriculture - not covered in the report - experiencing “the most challenging conditions of all sectors”.

“The services and retail sectors remain the star performers,” he said.

“Both reported an acceleration in output, orders and employment growth in March.