North’s economy inches back to growth

A fourth consecutive monthly increase in manufacturing output helped drag the North’s private sector economy back into growth mode in May, but public spending cuts, euro weakness against sterling, and tanking retail and construction sectors are tempering any long-term optimism.

The latest edition of Ulster Bank’s Northern Ireland PMI (purchasing managers’ index) shows a reading of 52.7 points for May — comfortably above the neutral 50 point mark which separates contraction from growth and a recovery from April’s 49.1 posting.

However, while May saw the North’s economy post its fastest rate of growth in seven months (in business activity and new orders, while staffing also increased strongly) challenges remain, says Ulster Bank’s chief economist for the North Richard Ramsey.

“Despite these encouraging signs, it is noted that the pace of Northern Ireland’s recovery continues to lag behind the UK as a whole, and most of the UK regions, in all of these measures,” said Mr Ramsay. “The headline indicators also conceal significant variation in performance by sector, and indeed within certain markets.

“Northern Ireland’s recovery in new orders is linked to increased demand within the UK market, as the strength of sterling vis-à-vis the euro continues to present a challenge for those exporting into the eurozone.

“Export orders fell for the fifth month in a row in May and have now been flat or falling since October 2014. It remains to be seen what the full extent of public spending cuts on the private sector will be and how long growth can be sustained.”