Growth In Northern Ireland Activity Second-Fastest In PMI Survey History

Today sees the release of November data from the Ulster Bank Northern Ireland PMI®. Download the survey report from here

The latest report – produced for Ulster Bank by Markit – suggested that the Northern Ireland economic recovery gathered momentum as growth of both activity and new orders accelerated to multi-year highs. This contributed to a survey record accumulation of outstanding business, although the rate of job creation eased. Meanwhile, cost inflation picked up, remaining faster than the UK economy average.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: “Last week’s Autumn Statement saw the biggest in-year upward revision to the UK’s economic growth forecasts in 14 years. Stronger growth in the UK economy is clearly good news for local firms and by extension the Northern Ireland economy as a whole.

“Indeed the latest PMI survey for Northern Ireland reveals that local firms, across all sectors, are not missing out on the economic recovery being experienced at a national level.

“Northern Ireland businesses reported a marked acceleration in business activity in November and extended the current run of growth to five successive months. The business activity index crossed the 60 mark for only the second time in the survey’s 11-year history and represented the fastest rate of growth since March 2004.

“This provides some indication of the scale of the turnaround that a growing number of local businesses are now experiencing. Furthermore there are no signs that this pick-up in activity is set to fade.

“Looking at the growth in new orders suggests that this momentum is set to continue into 2014. Last month local businesses reported the sharpest increase in new orders in almost 9 1/2 years with this improvement evident across firms within the manufacturing, construction and services sectors. The latter posted the sharpest increase in new orders of all sectors with November representing the service industry’s best month since the credit crunch officially began in August 2007.

“With their current staffing levels, manufacturing and service sector firms are struggling to cope with the recent surge in demand. As a result, firms within these sectors are reporting mounting backlogs of work. Indeed, last month saw the level of business outstanding (i.e. work not yet started or completed) rise at its fastest rate since the PMI survey began in August 2002.

“Whilst the recovery has clearly taken hold in terms of output and orders this hasn’t yet translated into employment growth to the same extent. However, given the rising backlogs that firms are reporting, particularly in the services sector, this may give more businesses the confidence to recruit in the New Year.”

The main findings of the November survey were as follows:

Sharpest rise in output since March 2004

Rising to 60.2 in November from 57.6 in October, the headline seasonally adjusted Business Activity Index signalled the second-fastest expansion of activity in the survey’s history, slower only than the record seen in March 2004.

The increase in output in Northern Ireland was broadly in line with the UK average. Where activity rose, this wasoften attributed to a general uplift in the UK economy and subsequent growth of new orders. The rate of expansion in new business in Northern Ireland accelerated sharply over the month and was the fastest since July 2004. New export orders also rose at a quicker pace during November.

Series-record rise in backlogs

Strong growth of new business led to a substantial accumulation of backlogs of work. Furthermore, the increase was the sharpest since the series began in August 2002 and much faster than the UK average. Although companies in Northern Ireland continued to raise their staffing levels in November, the rate of job creation eased to the weakest in four months. Nonetheless, each of the four monitored sectors increased employment during the month.

Further sharp increase in input costs

Northern Ireland companies posted another marked rise in input prices. Inflation in Northern Ireland remained faster than recorded across the UK as a whole. Respondents indicated that higher salary payments and increased energy costs had been the main factors leading to rising input prices. A fifth successive increase in output prices was registered in November. Those respondents that did increase their charges linked this to higher input costs.