Sharp reduction in output amid steeper fall in new orders
Inflationary pressures remain elevated
Slight decline in employment
The latest Ulster Bank Regional Growth Tracker pointed to a further sharp reduction in business activity in Northern Ireland’s private sector during June.
New orders, meanwhile, decreased at the fastest pace since October 2022 amid sustained strong inflationary pressures. Employment ticked down following a rise in May.
The headline Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s private sector – posted 43.9 in June, up slightly from the reading of 43.3 in May but below the 50.0 no-change mark for the second month running and signalling a sharp monthly reduction in business activity. Northern Ireland posted the steepest fall in output of the 12 monitored UK regions and nations.
Alongside weaker demand conditions, some companies also partly linked the drop in activity to civil unrest. All four monitored sectors posted reductions in output during June, led by retail.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“The first half of 2026 ended with the Northern Ireland private sector facing a range of challenges. Principal among them was the difficulty companies faced in securing new business as sustained price rises deterred customers and led to the sharpest fall in new orders since October 2022. In turn, activity and employment also decreased, although the drop in staffing levels was in part involuntary as some firms reported difficulties finding suitable replacements for departing workers.
“Geopolitics remain unpredictable, but energy markets appear to be indicating that the most volatile period is behind us. If that proves to be the case, lower oil and gas prices should hopefully help to dampen inflation in the months ahead, providing a path back to growth, and justifying a renewed sense of optimism at firms in June.”
The main findings of the June survey were as follows:
New business decreased rapidly at companies in Northern Ireland again in June. The fall was the third in as many months and most pronounced since October 2022. Northern Ireland posted the fastest reduction in new orders of the 12 monitored UK regions and nations. Panellists reported a lack of opportunities to secure new contracts, while there were particular references to weakness in the construction sector.
Hopes for a pick-up in new orders in the months ahead helped lead to renewed optimism regarding the prospects for output growth. That said, sentiment remained relatively weak amid worries among firms about their ability to secure new business.
Staffing levels decreased for the second time in the past three months during June. The fall was modest, but the sharpest since last November. Panellists reported that departing staff had not been replaced. In some cases, this reflected conscious decisions to limit employment amid lower workloads, but elsewhere difficulties sourcing suitable staff had prevented firms from taking on replacements.
Falling new orders meant that companies in Northern Ireland were able to deplete outstanding business in June. Moreover, the rate of reduction was the sharpest since January 2025. Meanwhile, suppliers’ delivery times lengthened again, extending the current sequence of monthly declines in performance to one year. Lead times lengthened markedly, and to a slightly greater degree than in May. Panellists reported delays in deliveries from England and issues caused by geopolitical tensions. Manufacturers posted a particularly strong deterioration in vendor performance.
Although the rate of input cost inflation eased slightly and for the second month running in June, input prices continued to increase at a substantial pace. The rise in operating expenses in Northern Ireland was the sharpest of the regions and nations covered by the report. According to respondents, higher input costs reflected a range of factors, including rising freight and fuel prices and increased wage bills. The aforementioned cost increases were often passed through to customers, resulting in a further steep rise in output prices. Here too, the pace of inflation eased only slightly from May.
