New order growth picks up in July

By Richard Ramsey, Chief Economist NI, Ulster Bank

Today sees the release of July data from the Ulster Bank Northern Ireland PMI ®. The latest report – produced for Ulster Bank by IHS Markit – indicated that solid growth of new orders fed through to a further increase in business activity. There were reports of success in securing new work from the Republic of Ireland amid sterling weakness, helping to boost total new business. Job creation was sustained, albeit at a more moderate pace, while inflationary pressures continued to ease.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said:

“The Ulster Bank Northern Ireland PMI for July reveals that the private sector notched up another month of growth in output, orders and employment. However, whilst growth is to be welcomed, we can't escape the fact that rates of expansion lag behind the UK averages for all of these indicators. Indeed, Northern Ireland’s private sector firms recorded the weakest performance in business activity, after the North East of England where output fell.

“The reality is that the overall tone of the latest survey is characterised by slower rates of growth. Firms reported a slight slowdown in the rate of growth in business activity, with July’s figure at a nine-month low. Meanwhile, new orders and exports saw their growth rates quicken. The private sector has been increasing its staffing levels for the last two-and-a-half years. Last month, however, the pace of job creation slipped to a six-month low.

“Softer inflationary pressures are to be welcomed. Following the recent record highs, firms reported the weakest rate of input cost inflation in July in 13 months.

“The theme of easing is becoming evident in some sectors more than others. Manufacturing output growth eased to a 14-month low, while employment fell for the first time in six months. But context is important here, with manufacturing firms experiencing a period of rapid expansion over the last 6-9 months. A slowdown is relative to these strong rates of growth. Furthermore, order books are growing at a rapid rate by historical standards.

“Meanwhile, firms within the construction industry are reporting a more marked easing. Output, new orders and employment all fell in July. Retailers have been reporting a weakening in demand in recent months. Retail sales stabilised last month following June’s decline. There was also a slight pick-up in orders with employment growth continuing albeit at its weakest rate in two years. The wider services industry (excluding retail) was the sector to buck the easing trend. Business activity growth accelerated to a 16-month high, with job creation picking up too.

“Despite the ongoing political and Brexit related uncertainty, Northern Ireland’s private sector remains relatively upbeat. Almost one-third of firms expect to have more work in 12 months’ time than they do currently. Indeed, optimists currently outnumber pessimists by more than two to one on this front.”

Further PMI material including infographics and a PMI Chart Pack (released tomorrow) are available on www.ulstereconomix.com


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