Today sees the release of March data from the Ulster Bank Northern Ireland PMI®. The latest report pointed to strong and accelerated increases in output and new orders, with firms at their most optimistic regarding the future for almost six years. The rate of job creation also picked up. Meanwhile, sharper increases in input costs and selling prices, plus supplier delivery delays were recorded.
Northern Ireland’s private sector moved up a gear in March, with growth in output, new orders and employment all accelerating. Indeed, it was the first time in 25 months that all four sectors recorded an increase in business activity. Similarly, all four sectors posted a pick-up in new orders for the first time in 33 months. Encouragingly, as far as new orders and employment are concerned, Northern Ireland was the top performer amongst the 12 UK regions. On a less positive note, inflationary pressures and supply chain disruption intensified in March. Higher wages and increased shipping charges were cited as factors behind rising input costs, which reached a 10-month high. The acceleration in input costs was most apparent within construction and retail, with the latter passing these on to its customers by raising prices at their fastest rate in a year. On the other hand, services was the only sector to see input cost inflation ease. The ongoing disruption in the Red Sea has contributed to rising costs and has lengthened supplier delivery times for the second month running.
But these challenges haven’t impacted on confidence in Northern Ireland’s private sector. This is because the scale of these challenges is modest compared to what the private sector has experienced in recent years. Indeed, NI firms are their most optimistic about future output in nearly six years. All sectors still expect output to be higher in a year’s time, with manufacturing its most optimistic since the question was first asked seven years ago.
The main findings of the March survey were as follows:
The headline seasonally adjusted Business Activity Index posted 56.6 in March, up sharply from 53.6 in February and pointing to a marked monthly expansion of business activity. Moreover, the rate of growth was the fastest since February 2022. The rise in Northern Ireland was much faster than the UK average. All four monitored sectors posted increases in activity, with the sharpest expansions in the manufacturing and services categories.
Output growth reflected success in securing new orders amid an improving demand environment. New business increased for the third month running in March, and to the greatest extent in just over two years. Some panellists reported that previously delayed projects had commenced. The rise in new orders in Northern Ireland was the sharpest of the 12 monitored UK regions and nations. Business confidence rose to a near six-year high and was the second-strongest since the series began in March 2017.
Meanwhile, firms continued to expand staffing levels, with the rate of job creation the sharpest in seven months. Accelerated increases in both input costs and output prices were recorded in March, often linked to higher wage pressures. Meanwhile, Red Sea disruption caused a further lengthening of supplier lead times.