April data from the Ulster Bank Northern Ireland PMI has signalled the strongest rise in business activity of the year-to-date. New orders have continued to increase solidly and companies are optimistic of further output growth over the coming year. Meanwhile, the rate of job creation accelerated. On the price front, both input costs and output charges continued to rise sharply.
Northern Ireland’s private sector has had an encouraging start to the second quarter of 2017. This was reflected in faster rates of growth in activity, export orders and employment. Indeed, output rose at its fastest pace so far this year, and firms increased their staffing levels more quickly than at any point in the last ten months. Inflationary pressures remain a challenge though, with sterling’s recent bout of weakness pushing costs higher. Input cost inflation remains most acute for manufacturers. But retailers and service sector firms are far from immune, seeing their cost bases increase at the fastest rates since September 2008 and March 2011 respectively.
Retailers have enjoyed a cross-border shopping tailwind since June last year. Not surprisingly though the rapid rates of growth in retail sales activity have eased significantly. The pace of job creation in retailing has also slowed, to its weakest rate since July 2015.
In terms of the wider services sector, its recovery has been rather subdued of late. However, April’s PMI survey reveals a marked improvement in conditions. Service sector output hit a 12-month high, whilst new orders and employment hit 13-month and 7-month highs respectively.Outside of services, manufacturing activity remains relatively buoyant, but construction firms saw activity stagnate and new orders contract in April.
Overall, despite the ongoing uncertainty with Brexit, Northern Ireland’s private sector firms remain confident about growth prospects for the year ahead. However, they are not as optimistic as their counterparts in Great Britain.
