Today sees the release of June data from the Ulster Bank Northern Ireland PMI Growth Tracker. The latest report signalled that the Northern Ireland private sector ended the second quarter of the year comfortably inside growth territory. New orders increased at the fastest pace since February 2022, feeding through to a marked rise in business activity. The rate of job creation was only modest, however, amid some reports of difficulties sourcing new staff.
Commenting on the latest survey findings, 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:
The headline seasonally adjusted Business Activity Index posted 55.8 in June, down from May’s reading of 56.4 but still signalling a marked monthly increase in output during the month. Business activity has now risen in each of the past seven months, with only London seeing a faster expansion in June. Particularly sharp increases in activity were seen across the manufacturing and service sectors, while growth was also recorded in construction and retail. Rising output was mainly a response to higher new orders, which increased at the fastest pace since February 2022.
Growth of new orders and the prospect of further improvements in the months ahead supported job creation in June. Although new business increased rapidly, the pace of job creation eased to a four-month low amid some reports of difficulties finding suitable staff. As a result, backlogs of work increased slightly. Rises in wages and transportation costs resulted in a further marked increase in input prices in June, with the pace of inflation ticking higher. In turn, companies also increased their output prices at a faster pace. Northern Ireland firms remained confident that output will expand over the coming year, with the level of sentiment unchanged from that seen in May.
