- Renewed declines in output and new orders
- Employment falls amid difficulties sourcing staff
- Higher fuel costs drive up input prices
The latest Ulster Bank Regional Growth Tracker signalled that business activity in Northern Ireland decreased in October amid a renewed fall in new orders.
Employment was also down and business sentiment dipped to a five-month low. Meanwhile, inflationary pressures intensified, largely as a result of higher fuel costs.
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 – dropped below the 50.0 no-change mark in October, falling to 47.9 from 53.0 in September. The reduction in output signalled by the index was the first in four months, albeit only modest.
Northern Ireland was the only one of the 12 monitored UK regions and nations to register a fall in activity at the start of the final quarter of 2026.
According to respondents, lower new orders and strong inflationary pressures were behind the fall in output.
Manufacturing was the only one of the four monitored sectors to record a rise in output.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“October was a disappointing month for Northern Ireland companies after what had been an encouraging third quarter of the year. Renewed falls in output and new orders were signalled, at least in part due to strong inflationary pressures driven by rising fuel costs.
Employment was also down, but not necessarily due to a desire on the part of companies to reduce staff. In fact, firms often reported wanting to replace departing workers but being unable to do so due to ongoing difficulties sourcing new employees.
Hopefully the falls in October will prove to be a temporary blip, particularly amid signs of improving economic conditions in the UK more generally, but companies themselves were broadly neutral in their outlook for the coming year.”
Mark Crimmins, Managing Director, Corporate, Commercial and Business Banking, Ulster Bank, said:
“October was clearly a more challenging month for Northern Ireland businesses, with activity and new orders falling after the improvement we saw during the third quarter. Rising costs, particularly fuel, are adding to the pressures firms are managing, while difficulties recruiting the right people remain an issue for many.
There are still reasons not to be overly pessimistic. The fall in activity was modest, manufacturing continued to grow and some businesses expect demand to improve over the year ahead. One month does not make a trend, but the figures underline the importance of confidence and a more stable cost environment as businesses plan and invest for 2027.”
The main findings of the October survey were as follows:
Northern Ireland companies signalled a fall in new orders in October, thereby ending a two-month sequence of growth. The fall was only modest, but contrasted with solid growth across the UK as a whole. Some panellists reported a softening of demand, while others highlighted the negative impact of rising fuel costs on their ability to secure new work.
Sentiment regarding the year-ahead outlook for business activity was broadly neutral in October, slipping to a five-month low. While a number of firms continued to predict increasing output on the back of demand improvements, others were concerned about economic conditions, a lack of confidence among clients and the impact of inflationary pressures.
October data pointed to a slight reduction in employment at Northern Ireland companies, following a modest rise in the previous month. Respondents often linked lower staffing levels to difficulties hiring replacements for departing workers.
A renewed fall in backlogs of work was also registered in October, the seventh in the past eight months. Anecdotal evidence suggested that the reduction in outstanding business was in line with lower new orders.
As has been the case in each month since July 2025, suppliers' delivery times lengthened in October. The rate of deterioration was solid and broadly in line with that seen in September. Panellists reported capacity constraints at suppliers and international material shortages.
Higher fuel costs was the central reason for the latest rise in input prices in the Northern Ireland private sector, according to respondents. Higher wages and oil prices were also reported. The rate of input cost inflation was substantial, quickening for the second month running to the fastest since June. The rise in Northern Ireland was the sharpest of the 12 monitored UK regions and nations.
The pass through of higher input costs – and those for fuel in particular – to customers resulted in a further marked rise in selling prices in October. Inflation ticked up from the previous month.
