Ulster Bank: Economy growing but mood is muted

Construction reported another fall in output

The Northern Ireland economy continued to perform solidly in April, an Ulster Bank survey has suggested.

However, inflation and supply chain issues are continuing to build.

The bank's monthly survey of private sector activity is considered to be a reliable indicator of the economy.

It suggests retail, services and manufacturing all saw continued growth in April. However, construction reported another fall in output.

It has been most exposed to supply chain problems,

The bank's chief economist, Richard Ramsey, said manufacturing and services are "running into capacity constraints".

"Skills shortages, coupled with strong demand, have resulted in backlogs mounting at rapid rates," he added.

Retail was one of the sectors that saw growth in April

"Lengthening supplier delivery times are adding to these difficulties. These backlogs should guarantee relatively strong rates of growth in business activity in the near term.

"But optimism for the year ahead remains relatively muted with the cost of-living crisis making retailers the least optimistic for the year ahead."

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The survey comes amid darkening prospects for the UK economy.

Last week, the Bank of England warned the UK faced a "sharp economic slowdown" this year.

The bank's policymakers expect the UK economy to shrink rather than expand in the final three months of this year.

It is also expects the economy to contract by 0.25% in 2023, down from its previous forecast of 1.25% growth.

While that would not technically be a recession - defined as the economy getting smaller for two consecutive quarters - it would leave the UK at a real risk of one.