Today sees the release of November data from the Ulster Bank Northern Ireland Growth Tracker.
The latest report pointed to a slowdown in growth in the Northern Ireland private sector. Output rose modestly, while new orders decreased and business confidence waned. Meanwhile, output prices rose at the fastest pace for a year-and-a-half amid increased staff costs.
Sebastian Burnside, NatWest Chief Economist, commented:
“Although output in Northern Ireland’s private sector continued to rise in November, the latest data brought the first signs that the recent spell of buoyant growth may be coming to an end. Output rose at the slowest pace since the opening month of the year as firms struggled to secure new orders.
“In fact, new business decreased in November, with the sharpest fall seen in the retail sector, a gloomy sign of muted underlying demand conditions heading into the all-important festive period.
“Last month we said that the November data would give us the first insight into the impact of the UK Budget on firms, and on an initial look the main effect has been to dampen business confidence, with overall sentiment the lowest in just over a year.
“Companies continued to hire additional staff, but the rate of job creation slowed, perhaps reflecting concerns around the impact that hiring is having on costs given that firms mainly linked inflationary pressures to staff pay. Meanwhile, the rise in selling prices in Northern Ireland was the sharpest across the UK.
“With the private sector’s performance losing some of its shine in November, the coming months will be key in determining whether we are seeing a temporary soft patch or the start of a more worrying downturn.”
The main findings of the November survey were as follows:
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 – remained above the 50.0 no-change mark in November to signal continued output growth in the Northern Ireland private sector.
That said, the reading was down to 51.5 from 55.8 in October, pointing to a much softer rate of expansion and one that was the weakest since January. Services activity continued to rise strongly, with manufacturing production also up. Meanwhile, activity fell in the construction and retail sectors.
November data pointed to a renewed decline in new business in the Northern Ireland private sector, thereby ending a period of expansion stretching back to the start of the year. The fall in new orders was only modest, but contrasted with a rise across the UK as a whole.
Business confidence fell sharply in November amid concerns around the impact of the UK Budget. Sentiment was at its lowest for just over a year. That said, companies remained optimistic on balance that output will rise over the coming year, linked to expected growth of new orders.
November data pointed to a further increase in employment at companies in Northern Ireland as firms responded to previous demand improvements. The rate of job creation slowed to a nine-month low, however, and was only slight. Continued hiring at a time of falling new orders meant that companies were able to deplete backlogs of work again in November.
Northern Ireland companies increased their output prices at a marked pace in November, with the rate of expansion the sharpest since May 2023. The rise in Northern Ireland was the strongest of the 12 monitored UK nations and regions. Panellists often linked higher output prices to increases in staff costs, and this was also a factor behind a further month of input cost inflation, with the latest rise the most pronounced in five months.
