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11/07/2024
Northern Ireland Private Sector Ends Q2 In Strong Growth
The June report from the Ulster Bank Northern Ireland PMI Growth Tracker indicates that the Northern Ireland private sector concluded the second quarter of the year well within growth territory.
New orders grew at the quickest rate since February 2022, leading to a significant increase in business activity. Job creation, though, remained modest, with some challenges reported in finding new staff.
Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: "The latest PMI wraps up the first half of 2024 and shows that NI’s private sector is in a much better condition than it was in January. Most of the key indicators have improved significantly in that period, with output, new orders and employment all markedly higher in the second quarter against the first. Growth in order books has been accelerating almost every month in 2024 and June represented the fastest rise in 28 months. Indeed, new order growth in Northern Ireland was the strongest of the 12 UK regions in June. Notably, export orders fell for the 14th month running, meaning that the overall new order growth is being driven by domestic demand.
"Whilst all four sectors have been in expansion mode, it is manufacturing that is the star performer. Manufacturing output and orders expanded at their fastest clip in 27 months, but despite this demand, manufacturers’ staffing levels fell for the third month running. Recruitment difficulties and challenges replacing leavers continued to be cited in the report, and this is leading to backlogs as the constrained capacity is not able to meet the growing demand. This situation looks set to intensify, with manufacturers’ optimism for output in 12 months’ time hitting a series high.
"Manufacturing’s strong demand is being accompanied by inflationary pressures, with input costs rising at their fastest pace in 16 months. These costs are being passed onto customers, with output prices rising at their fastest pace in 14 months. It is though encouraging to note that construction prices, on the other hand, which had gone through a sustained period of inflationary pressure, are now rising at their weakest pace in almost four years.
"The latest figures have been compiled in the mouth of a General Election. But the private sector, like households, eagerly awaits announcements from the next government. An emergency budget is expected, the only questions are when, and what will be in it?"
The main findings of the June survey were as follows:
In June, the headline seasonally adjusted Business Activity Index recorded 55.8, a slight decrease from May's 56.4, indicating a notable monthly rise in output. Business activity has seen continuous growth over the past seven months, with June showing faster expansion only in London. Both manufacturing and service sectors experienced particularly strong increases in activity, with growth also observed in construction and retail. The surge in output was primarily driven by a significant uptick in new orders, marking the sharpest increase since February 2022.
The expansion in new orders and expectations for future improvements supported job creation in June. Despite rapid growth in new business, the rate of job creation slowed to a four-month low due to challenges in finding qualified staff, leading to a slight increase in backlogs of work. Increases in wages and transportation costs contributed to a notable rise in input prices for the month, with inflationary pressures intensifying. Consequently, companies raised their output prices at a faster rate. Northern Ireland businesses maintained confidence in expanding output over the next year, with sentiment levels unchanged from May.
New orders grew at the quickest rate since February 2022, leading to a significant increase in business activity. Job creation, though, remained modest, with some challenges reported in finding new staff.
Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: "The latest PMI wraps up the first half of 2024 and shows that NI’s private sector is in a much better condition than it was in January. Most of the key indicators have improved significantly in that period, with output, new orders and employment all markedly higher in the second quarter against the first. Growth in order books has been accelerating almost every month in 2024 and June represented the fastest rise in 28 months. Indeed, new order growth in Northern Ireland was the strongest of the 12 UK regions in June. Notably, export orders fell for the 14th month running, meaning that the overall new order growth is being driven by domestic demand.
"Whilst all four sectors have been in expansion mode, it is manufacturing that is the star performer. Manufacturing output and orders expanded at their fastest clip in 27 months, but despite this demand, manufacturers’ staffing levels fell for the third month running. Recruitment difficulties and challenges replacing leavers continued to be cited in the report, and this is leading to backlogs as the constrained capacity is not able to meet the growing demand. This situation looks set to intensify, with manufacturers’ optimism for output in 12 months’ time hitting a series high.
"Manufacturing’s strong demand is being accompanied by inflationary pressures, with input costs rising at their fastest pace in 16 months. These costs are being passed onto customers, with output prices rising at their fastest pace in 14 months. It is though encouraging to note that construction prices, on the other hand, which had gone through a sustained period of inflationary pressure, are now rising at their weakest pace in almost four years.
"The latest figures have been compiled in the mouth of a General Election. But the private sector, like households, eagerly awaits announcements from the next government. An emergency budget is expected, the only questions are when, and what will be in it?"
The main findings of the June survey were as follows:
In June, the headline seasonally adjusted Business Activity Index recorded 55.8, a slight decrease from May's 56.4, indicating a notable monthly rise in output. Business activity has seen continuous growth over the past seven months, with June showing faster expansion only in London. Both manufacturing and service sectors experienced particularly strong increases in activity, with growth also observed in construction and retail. The surge in output was primarily driven by a significant uptick in new orders, marking the sharpest increase since February 2022.
The expansion in new orders and expectations for future improvements supported job creation in June. Despite rapid growth in new business, the rate of job creation slowed to a four-month low due to challenges in finding qualified staff, leading to a slight increase in backlogs of work. Increases in wages and transportation costs contributed to a notable rise in input prices for the month, with inflationary pressures intensifying. Consequently, companies raised their output prices at a faster rate. Northern Ireland businesses maintained confidence in expanding output over the next year, with sentiment levels unchanged from May.
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Northern Ireland WeatherToday:A showery start with outbreaks most frequent north of Lough Neagh and through the morning, before dwindling during the afternoon as the northwest breezes ease and brighter spells of weak sunshine prosper. Maximum temperature 8 °C.Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
