Another report has pointed to strong improvements in the Northern Ireland private sector.
The latest Ulster Bank Northern Ireland Growth Tracker says that growth of business activity picked up alongside a further solid increase in new orders, while companies continued to take on extra staff. Meanwhile, input cost inflation remained marked and output prices increased at the fastest pace in three months.
“The Northern Ireland private sector completed a full quarter leading the pack in terms of output growth in September, an impressive feat for an economy that this time last year was struggling deep in contraction territory,” says Sebastian Burnside, NatWest Group’s Chief Economist.
“Central to the rejuvenation of the private sector has been the success firms have had in securing new orders, and this continued in September, albeit with the pace of growth easing to a seven-month low.
“Companies continued to hire additional staff to try and deal with the influx of new work, but further reports from respondents of difficulties finding suitably skilled staff in the local labour market meant that backlogs of work accumulated again. While unlikely to be a short-term fix, any efforts to help upskill the local workforce would give firms a better chance of getting work completed on time and keeping customers happy. Perhaps linked in some part to staff shortages, wage pressures were again the key factor behind a further sharp rise in firms’ costs.
“Behind the generally positive story across the private sector, evidence of a two-speed economy has emerged. Growth continued to be driven by manufacturing and services, while the picture was much more muted in construction and retail.
“For now, the private sector seems in a good position to finish off the year with a flourish.”
The main findings of the September survey were as follows:
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 – increased to a four-month high of 56.0 in September from 55.7 in August. The sharp expansion was also the fastest of the 12 monitored UK regions and nations. The manufacturing and services sectors posted the strongest increases in activity in September. Construction activity was also up, but retail recorded a decline.
Northern Ireland companies posted a ninth consecutive monthly increase in new business during September. The rate of growth was solid, despite easing to the weakest since February. Meanwhile, companies remained optimistic that output will increase over the coming year. Where a rise in activity is predicted, companies linked this to increasing workloads and business expansion plans.
There remained evidence of pressure on capacity in the Northern Ireland private sector in September as backlogs of work increased for the fourth month running. Backlogs of work and inflows of new business encouraged companies to increase staffing levels again in September, extending the current sequence of job creation to 21 months. The pace of job creation in Northern Ireland was the sharpest of the UK nations and regions covered. This was despite some reports from companies signalling that they had found recruitment difficult due to shortages of suitably skilled candidates. Suppliers’ delivery times lengthened for the second time in the past three months during September as global shipping issues caused delays in supply chains.
September data indicated that the pace of input cost inflation eased for the third month running and was the softest since January. That said, input prices continued to increase sharply, often reflective of higher wage costs. In contrast to the picture for input costs, the rate of output price inflation quickened to a three-month high in September. That said, only the Northeast of England posted a softer rise in charges than Northern Ireland.