The Northern Ireland economy continued its tentative recovery last month with business activity in the private sector accelerating at the fastest pace in a year and companies hiring apace.
That’s according to the latest PMI report from Ulster Bank which showed that Northern Ireland' business activity growth was only outpaced by London in a comparison of all 12 UK regions, with output, new orders and employment all climbing at higher rates.
The retail sector posted the fastest growth with respondents to the PMI survey reporting higher sales and improvements in customer confidence and demand.
Meanwhile, new orders also expanded at the fastest pace in a year with export orders also ticking higher for the second month in a row. In response, hiring by companies also ramped up with the rate of job creation the joint-fastest in the survey’s history and the fastest of all 12 UK regions. The latter move is perhaps the most surprising, given the already tight labour market.
Inflationary pressures also continued to ease in March and were recorded at the weakest pace in over two years, but remained above the pre-pandemic average.
Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said momentum is continuing to build for the local economy but warned that a number of headwinds could temper growth in the coming months.
"Whilst we are seeing notable short-term improvements, and firms are relatively optimistic for the year ahead, there are lots of challenges that will impact on future growth,” he said. “The slowdown in the global economy is one factor, but the outlook for the public finances is also bleak and this is compounded by the ongoing lack of a functioning Stormont Executive. Meanwhile, households will continue to battle with a cost-of-living crisis."
The one sector which failed to grow last month was construction, an area where a lack of political leadership in Northern Ireland has hit hardest.
"Construction was the only NI sector not in expansion mode in March. Lack of a Stormont Executive and a paralysis in decision-making is being felt and will continue to be felt in this sector,” Mr Ramsey said. “This is reflected in the new orders indicator which has indicated declines for 21 months running. In the latest report, construction was the only sector not to see new orders growing, in fact recording a marked fall.
"One of the few bright spots for construction is employment, with headcounts growing as firms fill vacancies that they perhaps were unable to fill when the labour market was tighter. Indeed, employment was strong across all sectors, growing at the joint fastest pace on record and one that exceeded all other UK regions.
