Construction figures show further decline in activity

Data from the April report of the Ulster Bank Purchasing Managers’ Index showed a further contraction in private sector output in the second quarter of the year. Both activity and new business declined for the fifth month running, while inflation of both input and output prices accelerated to new records. Firms continued to shed staff on average in the latest survey period.  The Northern Ireland survey forms part of a series of regional surveys published by The Royal Bank of Scotland Group and NTC Economics, and is derived from the PMI surveys produced by NTC for the Chartered Institute of Purchasing and Supply. Commenting on the latest survey findings, Richard Ramsey, Northern Ireland Economist, Ulster Bank, said: ‘The key theme in the US and European economies is one of slower growth and higher inflation, and NI proves to be no exception in this regard. With oil prices hitting new record highs and sterling weakness driving up import prices it is not surprising that input costs for the UK and NI have hit new survey highs. NI firms have responded to the rising cost burden by raising output prices at a record rate. However, as this has failed to keep pace with cost inflation profit margins are under renewed pressure. ‘In March Northern Ireland was the only UK region to experience a contraction in business activity but since April, NI has been joined by four other UK regions. Furthermore, activity amongst UK firms as a whole slowed sharply in April and remains just above the threshold signalling no change in output.  The impact of falling workloads has filtered through into the labour market with NI firms recording marginally lower levels of employment for the second consecutive month. Five other UK regions alongside the Republic of Ireland also recorded lower staffing levels during the month.’ The rate at which business activity declined in Northern Ireland was only fractionally weaker than the survey-record pace set in March and was the steepest fall indicated across all twelve UK regions during April. Firms generally blamed a lack of incoming new work for the latest fall in output. Construction and manufacturing registered the strongest rates of decline.