PMI: Lifting of Covid restrictions resulted in Northern Ireland's best growth quarter for seven years
THE lifting of Covid-19 restrictions saw the north’s private sector record its best growth quarter for seven years, according to the latest business survey from Ulster Bank.
June’s Purchasing Managers Index (PMI) showed signs of rapid recovery both in terms of output, new orders and employment across the second quarter of 2021.
New orders increased for the third month running, with the rate of expansion at its fastest since July 2014.
But Northern Ireland firms experienced the worst quarter for inflationary pressure in the PMI’s 19-year history.
The monthly survey, which is based on the experiences of 200 private businesses across the north’s manufacturing, construction, retail and services sectors, showed no let-up in the acceleration of input costs for businesses during June.
Higher raw material and shipping prices were widely reported in the survey, reflecting the issues linked to global supply chains and Brexit.
The rising costs are being particularly felt in the construction and retail sectors, with companies raising their selling prices accordingly, resulting in record levels of output price inflation.
“This has been an all too familiar story during 2021,” said Ulster Bank’s chief economist Richard Ramsey.
“Businesses are passing these increased costs onto their customers at record rates. Once again, construction firms, followed by retailers, are posting the steepest price hikes.
“It is expected that supply chain disruption and significant inflationary pressures will be a feature of the business environment for the rest of the year and well into 2022.”
The economist said while the PMI reflected strong quarterly growth across the north’s private sector, the pace of expansion in business output and employment eased from May to June.
“All sectors saw their rates of job creation ease, with construction’s staffing levels falling.
“But services was the only sector to report a pick-up in business activity in June.”
Services firms reported their fastest rate of growth in business activity in over seven years.
“This was not unexpected given that June was the first full month that the hospitality sector has been open since lockdown restrictions were eased,” said Mr Ramsey.
According to the PMI, the combination of rising demand and the difficulties in securing materials led firms to increase their backlogs of work at the fastest pace in the survey’s history.
Suppliers’ delivery times also lengthened significantly in June, with Brexit the constant theme.
The survey also hinted at how the supply chain in the Republic has adapted to Brexit.
Demand for Northern Ireland goods continued to pick up across the border during June.
The US, Dutch and German markets also posted strong growth last month, reflecting a largely improving picture for the economic health of the north’s export markets.