Bet­ter 2018 than ex­pected for firms, but slow­down ‘may be ap­proach­ing’

Belfast Telegraph - - BUSINESS - BYRYANMcALEER

BUSI­NESS ac­tiv­ity in North­ern Ire­land ac­cel­er­ated much faster than the UK av­er­age dur­ing Novem­ber but there are signs of a slow­down in the econ­omy, ac­cord­ing to a re­port to­day.

The lat­est pur­chas­ing man­agers’ in­dex (PMI) from Ul­ster Bank re­vealed signs of a slow­down in the econ­omy, with Brexit uncer­tainty hit­ting de­mand from abroad.

Man­u­fac­tur­ing re­mained the stand­out per­former dur­ing the month, with pro­duc­tion in­creas- ing at the sharpest pace since June, rep­re­sent­ing the 26th con­sec­u­tive monthly rise in busi­ness ac­tiv­ity here. The only cat­e­gory to record a de­cline in ac­tiv­ity was the con­struc­tion sec­tor, which fell for the sec­ond month run­ning in Novem­ber.

But Ul­ster Bank chief econ­o­mist Richard Ram­sey said that when viewed against longer-term av­er­ages, the rate of over­all ex­pan­sion has been rel­a­tively sub­dued.

And against the back­drop of the on­go­ing po­lit­i­cal uncer­tainty here, busi­ness con­fi­dence re­mained rel­a­tively muted.

Re­ports pub­lished by NI Cham­ber and Man­u­fac­tur­ing NI last week re­flected grow­ing con­cern among lo­cal busi­nesses over Brexit.

The PMI re­port, pro­duced for Ul­ster Bank by IHS Markit, said Brexit uncer­tainty was men­tioned by busi­nesses as a fac­tor re­strict­ing de­mand from abroad. Al­though new ex­port or­ders con­tin­ued to in­crease, the rate of ex­pan­sion eased for the sixth suc­ces­sive month.

Last week’s Man­u­fac­tur­ing NI sur­vey re­vealed that most firms within the in­dus­try rank Brexit as their big­gest bar­rier. Some 16% of firms said they had al­ready started to stock­pile goods, while an­other 42% said they plan to do the same.

The Ul­ster Bank PMI re­flected a faster rise in ac­tiv­ity, but only a mod­est growth in new or­ders.

Mr Ram­sey said the PMI showed that the pri­vate sec­tor will have had a bet­ter 2018 than pre­vi­ously an­tic­i­pated, but added: “While con­tin­u­ing growth in the pri­vate sec­tor is en­cour­ag­ing, the re­al­ity is that the rate of ex­pan­sion is rel­a­tively sub­dued com­pared to longer-term av­er­ages.

“In­deed, the fi­nal three months of the year are shap­ing up to have the weak­est rate of growth in nine quar­ters.

“Mean­while, ex­port or­ders are set to have their weak­est rate of growth in 10 quar­ters. In­deed, in Novem­ber the pace of ex­port or­der growth slowed to its weak­est rate since the EU ref­er­en­dum.

“This slow­down is clearly hav­ing an im­pact on sen­ti­ment for the year ahead. The over­all health of the UK econ­omy is the most im­por­tant driver of ac­tiv­ity in the North­ern Ire­land pri­vate sec­tor.

“This trend there­fore does not bode well for 2019.”

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