Today sees the release of March data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by Markit – pointed to continued strong growth of business activity and new orders at Northern Ireland companies, helping to support a record rise in employment. Meanwhile, the rate of input cost inflation quickened sharply and output prices rose following a reduction in February.
Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said:
“At the end of the first quarter of 2014, it is clear that Northern Ireland’s private sector recovery is still firing on all cylinders. Local firms have now posted three successive quarters of strong growth. The pace of business expansion eased in March but the corresponding acceleration in new orders growth suggests strong rates in this area should continue for some time yet. Northern Ireland’s private sector firms have now reported growth in new orders for 10 consecutive months.
“The most encouraging aspect of the latest survey concerns employment. The sustained period of business growth is feeding through into job creation with renewed vigour. Last month firms saw their staffing levels increase at the fastest rate since the PMI survey began in August 2002. Indeed, Northern Ireland firms reported the fastest rate of employment growth of all the UK regions. On a quarterly basis, the first quarter of 2014 saw Northern Ireland’s private sector employment expand at its fastest rate in seven years.
“Northern Ireland’s private sector performance saw some variation by sector. Retailers posted a significant slowdown in the pace of growth in business activity, orders and employment. Nevertheless, the sector is still expanding at a healthy rate. The manufacturing industry also saw an easing in the growth rates of business activity and new orders, albeit from the record rates posted a few months ago. Encouragingly, however, the manufacturing sector increased its staffing levels at its fastest rate on record in March. It was a similar story for the construction industry which saw job creation and new orders expand at record rates last month, albeit from very low levels. The services sector reported an acceleration in business output, new orders and employment in March. The New Orders index was close to its record high while the rise in employment levels was the fastest rate since August 2007.
“On the downside, local firms are reporting an increase in inflationary pressures. This was most apparent within the construction industry. However, following years of output price deflation for its goods and services, the construction industry is now raising prices at its fastest rate since 2009. This highlights a recovery in pricing power, profitability and is symptomatic of an increased level of demand within the sector.”
The main findings of the March survey were as follows:
New order growth quickens
New business atNorthern Irelandprivate-sector firms rose for the tenth successive month in March, and the rate of expansion quickened from that recorded in the previous month. The rise in new orders was faster than theUKaverage. All four monitored sectors posted increases in new business, led by services. Meanwhile, the construction sector posted a record rise in new orders. Business activity also rose further in March, as highlighted by the headline seasonally adjusted Business Activity Index posting 56.6 from 58.1 in February. Company expansions and strengthening economic sentiment supported growth. However, the increase in output inNorthern Irelandwas weaker than that seen across theUKeconomy as a whole.
Record rise in employment
Staffing levels at Northern Irelandcompanies increased at the fastest pace since the series began in August 2002, with higher employment largely reflecting increased workloads. Sharper rates of job creation were recorded in the manufacturing, services and construction sectors. Staffing numbers inNorthern Irelandincreased at a quicker pace than at theUKlevel. A further accumulation of backlogs of work was recorded in March, with the pace of increase quickening for the second month running.
Rate of cost inflation accelerates
The pace of increase in input prices quickened in March, reversing a slowdown seen in the previous month. The construction sector registered by far the fastest rise in input costs. According to respondents, higher supplier charges and staff costs had contributed to increased cost burdens. A rise in output prices was also recorded in March, the eighth in the past nine months. The construction sector saw charges increase at the fastest pace since data were first available in February 2009.
