21 October 2014

Northern Ireland PMI - new business growth remains sharp

New business growth remains sharp, but eases to 11-month low

The latest Ulster Bank Northern Ireland PMI® report – produced for Ulster Bank by Markit – reports that last month, Northern Ireland's private sector posted its fifteenth successive month of expansion in output, export orders and employment. At a sectoral level, manufacturing was the strongest performer, with September contributing to faster rates of growth in Q3 relative to Q2. Whilst services also recorded a pick-up in business activity in the month, the third quarter represented the slowest rate of growth during the past four quarters, and order books in the sector expanded at their weakest rate since the recovery began. In the construction sector, rates of growth remain at healthy levels, largely linked to work outside of Northern Ireland, despite an easing in output and new orders during September.

"Encouragingly, inflationary pressures eased significantly last month across the board, with input cost inflation falling to its lowest level since June 2012. The continued decline in the price of oil, which in sterling terms is currently at its lowest level since December 2010, will have contributed to lower fuel costs. Meanwhile competition continues to exert downward pressure on pricing power, with the prices for Northern Ireland goods and services falling for the first time in seven months. Output price deflation was evident in both the services and retailing sectors, with the latter reporting its first fall in prices charged in five years. Indeed, local retailers signalled a marked slowdown in the third quarter, with business activity falling on a quarterly basis for the first time since June 2013.

"Looking more closely at manufacturing, it recorded the fastest rate of growth in output, new orders and job creation across the sectors. The pace of growth in all three of these indicators accelerated in September with the output measure expanding at a faster rate than the equivalent UK and Republic of Ireland indices. Indeed, Northern Ireland's manufacturing firms posted the fastest rate of output growth of practically all of the economies tracked by Markit Economics. In the near-term, this robust rate of growth amongst local manufacturers should continue, with order books expanding in September at their fastest rate in almost 8 years. Beyond that time-horizon, however, there is mounting evidence that a slowdown is around the corner. The UK manufacturing sector saw the rate of growth in export orders almost grind to a halt last month. Meanwhile the Eurozone economy is flirting with both recession and deflation.

"Clearly, local firms will not be immune to slowdowns within the economies of their key trading partners. In addition, the yet to be determined cuts in public expenditure in the current financial year, will act as a drag on private sector growth in the months ahead."

Access the full report on the link below.