Activity in the Northern Ireland private sector is continuing to grow and business leaders are confident of further expansion in the year ahead.
Those were the key takeaways from the latest Purchasing Managers Index (PMI) report from Ulster Bank which showed the fourth consecutive month of growth in May, amid a further easing of inflationary pressures.
Of note, input and output prices increased at the lowest rate in around two-and-a-half years, reflecting anecdotal evidence that the rate of inflation has eased in many areas, particularly energy.
"A welcome slowdown was also evident in inflationary pressures, with input cost and output price inflation easing to its weakest level in around two-and-a-half years,” Richard Ramsey, Chief Economist Northern Ireland at Ulster Bank, said. “It is encouraging to note that NI’s inflationary pressures are the least marked across the UK regions.
“There were some reports of energy prices coming down, with ongoing inflation linked to higher wages.”
However, while business activity is increasing, the rate of expansion in output and employment showed signs of easing, with the latter falling to a four-month low.
In terms of sectors, services was the only one to record a rise in business activity in May, with construction and retail joining manufacturing in contraction territory. Services also posted the strongest rise in new orders, followed by retail.
“Retail’s recent purple patch of growth in sales and orders appears to have passed although retail is still recruiting hard,” Mr Ramsey said. “Meanwhile, the slump in construction orders continued and is approaching two years of continuous decline.
“But again, construction firms are increasing staffing levels to address long-standing skills gaps.”
While the positive outlook for the month ahead is welcomed, companies aren’t blind to continued headwinds.
"Encouragingly all four sectors expect growth in business activity in 12 months’ time, with manufacturing the most optimistic and retail the least. But firms said that hikes in interest rates and political stagnation have been impacting on growth and cuts in public expenditure are also a concern. None of these factors is expected to go away any time soon."
