Bank survey says NI private sector still 'struggling'

The report says construction is one sector that is still "struggling"

Private sector activity in Northern Ireland has fallen at the fastest rate in three months, according to a report by the Ulster Bank.

The latest Purchasing Managers Index (PMI) suggests the sector is struggling to recover from "adverse" economic conditions over the past two years.

There has been a marked decline in new business and a drop in staffing levels within the private sector.

Construction and service industries are singled out as still "struggling".

This contrasts with their UK equivalents which continue to report robust rates of growth.

The bank's chief economist Richard Ramsey, said NI remains the only UK region still experiencing declining levels of output.

"The majority of indicators within the PMI survey signalled further deterioration in economic conditions in May.

"There also looks to be no sign of NI's construction and services output stabilising any time soon, with new orders continuing to fall at a rapid rate in May.

"The local services sector appears to be in an extremely weak state, new orders contracting for the 27th consecutive month and at their sharpest rate since March 2009."

Mr Ramsey also warned that outside of the public sector, construction and service industries will "bear the brunt" of the forthcoming public expenditure cuts.

Manufacturing is one industry that has seen some growth and is the only sector to increase its staffing levels in May.

"The pickup in new manufacturing orders in recent months has finally filtered though into increased output," said Mr Ramsey.

"Indeed the rise in manufacturing output in May was the first increase since November 2007."

"Never-the-less, NI's manufacturing output performance still lags considerably behind that of the UK."

The bank's survey of firms - the PMI - also showed that average input costs rose sharply in May, with the rate of inflation accelerating to the most marked in nineteen months.

Higher prices paid for a variety of raw materials were reported as having driven cost inflation.

Respondents also reported higher fuel and energy costs in May.