Trading conditions, particularly in retail and construction, remain difficult despite the Manx economy now outstripping that of its Channel Island rivals.
The government last week hailed 30 years of consecutive economic growth, with national income hitting £4bn for the first time.
In contrast, Guernsey’s national income rose by 0.5 per cent to £2.18bn in 2013 while Jersey’s GDP was essentially unchanged at £3.7bn.
But while the Council of Ministers’ latest quarterly economic report shows that the Manx economy improved between April and June this year, it paints a picture of mixed fortunes.
Employment rose by 350 and unemployment fell to about 900.
But the report notes: ‘There are clearly still difficult trading conditions in the domestic economy, particularly retail and construction.
‘Strong employment levels should support these areas going forward, as they are dependent on general stability and confidence, which can only come through increased employment.’
Construction remains depressed, with some companies reliant on government contracts for the bulk of their work.
But the quarterly report states there is optimism that demand for construction services will increase in the medium term.
The retail sector continues to face serious challenges, with margins eroded by increasing costs and downward pressure on prices.
Ongoing roadworks disrupting access to town centres, the speed of progress of the Strand Street regeneration scheme, proposals to introduce car parking charges and increases to the minimum wage are all cited as concerns by the sector.
However, some new jobs were created in the last quarter and shops occupancy in Douglas has seen some improvement.
Banking and financial services, meanwhile, bucked the expected trend.
Despite the challenges facing this sector, the number employed in financial and professional services actually rose.
A small number of previously anticipated job losses within banking have been offset by job growth in the corporate service providers, insurers and professional financial services. ‘Anecdotal indicators in the financial services sector suggest growth in the 2nd quarter which is positive and counter to the trend expected,’ says the report.
It notes that recent HMRC decisions regarding the accessibility to the UK banking ring-fence from the Crown Dependencies and increased focus on transparency will put pressure on numbers of bank licences.
The second quarter of the year also saw the licensing of three new captive insurers on the Island, and the licensing of an additional fiduciary. There was growth in the number of pension schemes managed, up 35 or 3.9 per cent.
‘These early recovery signs, though fragile, are backed by anecdotal evidence from the relevant sectors,’ says the report.
Manufacturing and engineering grew in the second quarter of this year and are expected to perform strongly with industry surveys indicated firms are planning to recruit later in the year.
Manx firms are well placed to take advantage of an expected period of sustained growth in the global aerospace industry up to 2020.
But the CoMin reports notes that a minority of manufacturing and engineering firms are less positive about the coming quarter, citing a decline in orders for military hardware and a high dependence on a small set of very large global producers in the aircraft industry as threats to growth.
The e-business sector continues to thrive with two new licences going live, taking the tally to 56.