Surge in NI exports, but private sector only sees marginal growth

Today sees the release of October data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by Markit – signalled that business activity returned to growth, although the rate of expansion was modest as total new orders were largely unchanged in spite of a substantial increase in exports. Export orders were supported by the weakness of sterling, but this also had the effect of pushing up input costs which rose substantially. The main findings of the October survey were as follows:

  • The headline seasonally adjusted Business Activity Index posted 51.9 in October, signalling a modest rise in output in Northern Ireland’s private sector. This followed a reading in line with the 50.0 no-change mark in the previous month.
  • The overall increase in business activity was led by retail, while expansions were also recorded in the manufacturing and services sectors.
  • In contrast, construction posted a sharp and accelerated decline in output.
  • Total new business, meanwhile, was broadly unchanged for the second month running amid uncertainty following the EU referendum result.
  • The weak trend in total new orders was recorded despite a near-record increase in new export orders, which surged on the back of the weakness of sterling against the euro.
  • A further rise in employment was recorded in October, partly in order to support growth of output. Job creation has now been registered in each of the past 21 months.
  • Only the construction sector reduced staffing levels.
  • The increase in output combined with stagnant new order levels led to a sixth consecutive monthly reduction in backlogs of work. That said, the rate of depletion was the slowest in this sequence.
  • Sterling depreciation pushed up input costs for companies in Northern Ireland during October, with the rate of inflation accelerating to the sharpest since May 2011.
  • Manufacturers posted the fastest increase, with the latest rise the strongest in more than eight years.
  • A number of respondents reported passing on higher input costs to customers, resulting in a further marked monthly increase in output prices in October.
  • Retail posted the strongest rise in charges since April 2011, while manufacturing selling prices also increased considerably.

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Infographic Ulster Bank PMI October 2016

Download the full report: Ulster Bank NI PMI October 2016

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