- Marked increase in output amid renewed growth of new orders
- Employment ticks down
- Cost inflation eases, but charges rise at faster pace
The latest Ulster Bank Regional Growth Tracker pointed to strengthening growth of business activity in Northern Ireland's private sector as new orders rose for the first time in five months.
Despite this, employment dipped for the second time in three months and there were some tentative signs of capacity pressures building. Input costs continued to rise sharply, while selling price inflation hit a three-month high.
The headline Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s private sector – rose to 55.5 in August from 51.4 in July, pointing to a marked monthly increase in business activity in the region and one that was the fastest since October 2024.
Moreover, the rise in output in Northern Ireland was the strongest of the 12 UK areas covered by the report.
Panellists linked rising activity to new projects getting started and higher tourism numbers.
Growth was led by the manufacturing and service sectors.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“Northern Ireland companies are putting the disruption of the late-Spring behind them, with August seeing a sharp rise in business activity amid renewed growth of new orders. In fact, Northern Ireland was the fastest growing part of the UK in terms of output. Expansions were particularly pronounced in manufacturing – where new projects are starting to ramp up, and services – boosted by increased tourism numbers and events such as the Fleadh Cheoil.
“Difficulties hiring staff to resource the new business coming in were highlighted again, meaning that employment decreased. This, alongside rising new orders meant that operating capacity was only just able to keep outstanding business from expanding.
“Companies will be hoping to see further growth in the months ahead, but inflationary pressures remain a headwind. Costs for fuel and staff increased again in August, with other firms highlighting rising prices for steel. In turn, charges increased at the fastest pace for three months, potentially limiting demand growth.”
Mark Crimmins, Managing Director, Corporate, Commercial and Business Banking, Ulster Bank, said:
“The latest Growth Tracker points to some encouraging signs for Northern Ireland's economy, with business activity strengthening and new orders returning to growth after a challenging period. It is particularly positive to see firms in sectors such as manufacturing and services reporting increased activity, reflecting both new project opportunities and continued demand across parts of the economy.
“However, businesses continue to operate in a complex environment. Recruitment challenges, capacity constraints and ongoing cost pressures remain concerns for many firms, and these factors could influence the pace of growth in the months ahead.
“While there are grounds for cautious optimism, companies will be looking for further evidence that this improvement can be sustained. Supporting businesses to invest, grow and navigate economic uncertainty will remain important as they plan for the year ahead.”
The main findings of the August survey were as follows:
August data pointed to a renewed increase in new orders in Northern Ireland's private sector, thereby ending a four-month sequence of decline. Some panellists reported that contracts had been signed for projects due to start next year. That said, the rate of expansion was only marginal and weaker than the UK average.
For the third month running, companies were optimistic that output will rise over the coming year, with new projects set to get underway. Some firms reported being particularly confident regarding the outlook for the final quarter of 2026. Business confidence ticked down, however, and was just below the series average.
Outstanding business was broadly unchanged in August, following a marked reduction in the previous month. Panellists reported some pressure on capacity as a result of rising new orders and staff shortages.
Employment decreased for the second time in the past three months, albeit only slightly. A number of respondents indicated that they had found it difficult to replace departing staff due to a shortage of suitable candidates.
Suppliers' delivery times lengthened for the fourteenth consecutive month in August, and to a sharp degree that was the most pronounced since April. Panellists reported longer lead times for receiving a range of items, with some linking this to shipping delays.
Although the rate of input price inflation eased for the fourth consecutive month in August to a six-month low, companies continued to register a sharp monthly increase in input costs during the month. Higher fuel prices were widely mentioned, with other respondents highlighting rising costs for steel. Increased wages were also a factor behind greater company expenses.
The passing on of higher input costs to customers resulted in another steep monthly rise in output prices. Moreover, the rate of charge inflation quickened to a three-month high. Both input costs and output prices rose more quickly in Northern Ireland than elsewhere in the UK.
