THE north's private business sector has recorded the best start to the year since 2007 according to the latest PMI report.
Business activity in Northern Ireland rose at its fastest pace since December 2016 the January figures show, boosted by strong new order inflows.
The rate of private sector expansion in January was the second fastest of all UK regions and key to the latest rise in output were increases in new business and improving client demand. New orders expanded sharply, with the rate of growth little-changed from December’s 40-month high, while backlogs were again accumulated in January. According to the report companies cite higher new orders and issues in relation to the supply of material as central to the build-up of business. As a result of higher workloads firms have responded by taking on additional staff, which although lower than the rate in December is above the UK average.
Retail remains the fastest growing sector, but the marked acceleration in private sector output was largely driven by construction and services. Output in these sectors hit 39-month and 44-month highs respectively, while retail sales growth increased at its fastest rate in almost four years, the figures show.
In spite of the positives a sharper increase in input costs was also recorded and companies continued to raise their charges at a marked pace. Higher fuel prices and increased staff costs were the key factors behind another monthly rise in input prices at the start of the year, while the rate of inflation quickened to the fastest levels since May, with the retail and manufacturing sectors seeing the steepest increases.
In relation to business confidence, optimism amongst firms is the strongest recordest since May, as the launch of new products, further growth of new orders and a favourable exchange rate are all set to support increases in output over the coming year.
Ulster Bank chief economist Richard Ramsey said Northern Ireland is bucking the UK trend, by reporting growth in the private sector.
"Northern Ireland’s private sector is following the trajectory of its global and Eurozone peers rather than the UK," he said.
“According to the PMI, January represented the best start to a year amongst Northern Ireland’s private sector since 2007. Back then, the challenges that lay ahead were largely unseen and unknown. In contrast today, the geopolitical risks, fiscal challenges and ongoing Brexit uncertainty have certainly been well flagged. Despite these challenges, firms remain upbeat about the year ahead and the most optimistic since May 2017. What does or doesn’t happen with Brexit will have a large bearing on whether this optimism is realised.”
