- Solid rises in output and new orders
- Renewed job creation
- Cost inflation quickens
The latest Ulster Bank Regional Growth Tracker pointed to sustained output growth in the Northern Ireland private sector as new orders increased at a faster pace.
Emerging pressure on capacity encouraged companies to increase staffing levels. Meanwhile, input costs rose sharply again, feeding through to higher output prices.
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 – posted 53.0 in September, down from 55.5 in August but still comfortably above the 50.0 no-change mark and signalling a third consecutive monthly increase in business activity.
The solid expansion in output in Northern Ireland was the second-fastest in the UK, behind only that seen in London.
Respondents mainly linked the latest rise in activity to increased new business.
Three of the four monitored sectors registered growth of activity, with rates of expansion most pronounced in manufacturing and services. Only construction saw activity fall.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“September completed a positive third quarter of the year for companies in Northern Ireland, with growth of activity sustained amid greater success among firms in securing new orders. Prospects appear good for further expansion in the months ahead as well, with companies reporting a rise in outstanding business. This supported an increase in employment and should mean further efforts to expand capacity and output in the near future as firms make efforts to clear projects. There were still some reports, however, of difficulties recruiting staff.
“Another headwind for firms remains the inflation picture as higher energy and fuel costs in particular push up prices for firms and have the potential to restrict demand further if they continue to rise.”
Mark Crimmins, Managing Director, Corporate, Commercial and Business Banking, Ulster Bank, said:
“September's figures paint a positive picture for Northern Ireland's private sector. Strong growth in new orders, rising business activity and renewed hiring all point to firms seeing opportunities and planning ahead with confidence.
“While inflationary pressures remain a concern, Northern Ireland businesses continue to demonstrate resilience. The challenge now is to convert this growing pipeline of work into sustained growth, investment and job creation in the months ahead.”
The main findings of the September survey were as follows:
After increasing for the first time in five months during August, new business in Northern Ireland's private sector rose again in September. Moreover, the rate of expansion was solid and the fastest since March. In fact, the rise in Northern Ireland was the strongest of the 12 monitored UK regions and nations.
Predictions of further increases in new orders in the coming months supported continued optimism in the year-ahead outlook for business activity. Companies were upbeat for the fourth consecutive month, although the level of sentiment eased to the weakest since June.
Headcounts increased for the second time in the past three months in September. The rate of job creation was modest, but the fastest since March. The rise in Northern Ireland compared favourably with the UK average, where staffing levels continued to fall. Where workforce numbers increased, panellists linked this to pressure on capacity. Some companies again reported difficulties recruiting staff, however.
Strain on capacity was signalled by a first accumulation of backlogs of work for seven months, driven by stronger new order growth. Moreover, the rise in outstanding business was the sharpest in two years.
Pressure on supply chains was also signalled at the end of the third quarter, resulting in a fifteenth consecutive monthly lengthening of suppliers' delivery times. The latest deterioration in vendor performance was solid, albeit the least pronounced for a year.
Input costs in Northern Ireland's private sector increased sharply again in September, with the pace of inflation quickening to a three-month high amid reports of higher costs for energy, fuel, oil and raw materials.
While input costs increased at a sharper pace in September, selling price inflation eased. Nonetheless, charges continued to rise rapidly as companies passed on higher cost burdens to their customers. Continuing the recent trend, the rises in both input costs and selling prices in Northern Ireland were the sharpest across the UK.
