Modest acceleration in business activity growth in April

Today sees the release of April data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a mild acceleration in private sector business activity growth, while new orders continued to increase, albeit only marginally quicker than March’s 17-month low. Nonetheless, despite subdued demand pressures, backlogs of work increased further, prompting firms to hire additional staff. In line with a strong and accelerated rate of input cost inflation, businesses reported a further marked increase selling charges.

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The cost of living squeeze ends….or does it?

Earnings squeeze is over

The combination of accelerating wage growth and an easing in inflationary pressures is clearly good news for consumers. In February, annual UK wage growth (2.8%) finally overtook the equivalent rate of inflation (2.7%) for the first time since the start of 2017. Following the latest figures for March this trend looks set to continue.  The annual rate of UK consumer price inflation (CPI) eased to 2.5% in March – its weakest rate in twelve months. The price of consumer goods (e.g. food & clothing) inflation eased from 3% y/y in February to 2.4% in March.  Conversely, consumer services inflation nudged higher to 2.5% over the same period.

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Sharp rise in private sector activity at start of 2018

Employment

The Ulster Bank NI PMI for January 2018 is out today. It shows a pick-up in growth momentum in the Northern Ireland private sector. Business activity rose at the fastest pace since December 2016 . A sharper increase in input costs was also recorded, however, and companies continued to raise their prices at a marked pace. Continue reading

Output and new orders continue to expand solidly

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Today sees the release of November data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to further solid increases in output and new orders, with rates of expansion in both slightly quicker than those recorded in October. Rising workloads led to a further accumulation of outstanding business, with companies increasing staffing levels accordingly. Meanwhile, input cost inflation accelerated to a six-month high. Continue reading

Sharp rise in new orders supports further growth of activity

PMI-1Today sees the release of October data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – indicated that the private sector remained firmly in growth territory, despite rates of expansion in output and new orders easing from the previous month. Firms continued to take on extra staff at a solid pace. Meanwhile, input costs rose sharply again and the rate of output price inflation quickened. Continue reading

No surprise that new car sales are falling

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Northern Ireland retailers have benefited from the tourism boom and a surge in cross-border shoppers.  With the latter boosted by the post-EU referendum depreciation in sterling. This provides a veneer of consumer strength driven by visitors. However, the underlying picture is somewhat weaker.

New car sales are a key barometer of consumer confidence and provide a more meaningful indicator of the health of the consumer. Inflation has been outpacing wage growth and this is sapping household disposable incomes. A significant range of welfare benefits are also in the midst of a multi-year freeze. Against this background it is perhaps not surprising that the biggest discretionary spending item after housing, new car sales, are falling.

Showrooms reported their worst October for sales of new cars in five years, with registrations for the first 10months of the year down over 5% y/y.

2017 looks set to see the biggest annual decline since 2011. Local new car sales are over 20% below their peak in 2007.

This compares with the UK where new car sales, though falling, are still 8% above their pre-recession high. 2018 is also expected to be a challenging year for the local consumer with the cost of living squeeze set to tighten its grip.