Downturn deepens in Northern Ireland private sector

Today sees the release of June data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a deepening downturn in the Northern Ireland private sector. Brexit uncertainty led to sharper falls in output and new orders, with firms pessimistic regarding the 12-month outlook.

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House prices continue to rise but activity on the turn?

Northern Ireland Residential Property Price Index Comment

Northern Ireland’s housing market has been a source of continued positivity in recent years, with housebuilding, prices, transactions and mortgage activity all at multi-year highs.  Though the property market remains in recovery mode, rather than recovered, following the biggest residential property downturn in UK history.

Residential property price growth has been slowing in both the UK and Republic of Ireland markets. The latest Residential Property Price Index for Northern Ireland points to a similar trend. Residential property prices posted their first quarterly fall in two years in Q1 2019 with a 1.0% decline.  Annual house price growth eased from 5.1% in Q4 2018 to a more sustainable 3.5% in Q1 2019 – a rate that remains above consumer price inflation and broadly in line with average earnings growth. Lower rates of house price inflation (2-3% p.a.) are to be welcomed.

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Weekly Brief – Unparalleled times

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Prime Minister Theresa May is due to unveil Brexit plan B to Parliament today but it is unlikely to differ much from her first version. Following a crushing defeat on the Withdrawal Agreement and having narrowly survived a no-confidence vote, Mrs May offered an olive branch of cross party talks but was rebuffed by Labour leader Jeremy Corbyn. Talk of an extension of Article 50 is on the rise but an exit from EU without a deal is still possible.
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UK CPI Inflation set to fall further in 2019

Consumer confidence both nationally and locally is not in a great place. Clearly the ongoing “political recession” isn’t helping the mood either. The good news, however, is that inflationary pressures continue to ease with the headline Consumer Price Index rising by 2.1% y/y in December.  That marks the weakest rate of consumer price inflation in almost two-years. Significantly this welcomed move is coinciding with wages rising at their fastest rate in a decade.

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Falling petrol prices were a key driver behind the latest downward move. Petrol price inflation slowed from 7.6% y/y in November to 1.5% y/y last month. Back in October prices were rising at 11.5%. This trend is set to continue with an easing in energy related inflationary pressures both in utility bills and petrol / diesel costs.

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Significant price cuts to gas and electricity bills are expected to be announced later this month. Similarly, home-heating oil customers should see further significant falls in the coming weeks and months. Petrol and diesel prices have already fallen by around 2% in the first two weeks of January. Food price inflation also slowed dramatically during 2018. Having started the year at 3.9%, annual food price inflation eased to 0.4% in December. What does or doesn’t happen with Brexit (supply disruptions etc) could have a major bearing on food prices in 2019.

In the near-term, CPI inflation looks set to fall below the MPC’s 2% target in January with the annual pace of consumer price rises set to slow to 1.3% / 1.4% by Q4 2019. Against this backdrop and given the growing risks of a global slowdown coupled with the near-term concerns surrounding Brexit, the Bank of England isn’t going to be in a hurry to raise interest rates. 2019 could well see the Monetary Policy Committee sit on its hands and keep its Bank Rate at 0.75%.

New orders rise at weakest pace in four months

Today sees the release of August data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a loss of growth momentum in the Northern Ireland private sector. Although output and new orders continued to rise solidly, rates of expansion in both were weaker than recorded in July. That said, the rate of job creation picked up, as did business confidence. Inflation of both input costs and output prices eased, but remained elevated. 

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Output growth quickens to four-month high

Today sees the release of June data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled that the Northern Ireland private sector ended the second quarter of 2018 on a positive note, with sharper rises in output and new orders recorded. There were further signs of increasing inflationary pressures, however. Meanwhile, business confidence dipped and was the lowest for almost a year.

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