The latest Ulster Bank Regional Growth Tracker signalled further challenges for Northern Ireland companies during April.
Firms have reported that increased global economic uncertainty, particularly related to US tariff announcements, is significantly impacting demand across various regions. This is reflected in observations of reduced client activity and overall caution towards spending.
Business activity decreased on the back of a fall in new orders, while sentiment dropped sharply. Meanwhile, input costs increased rapidly again and output price inflation hit a 28-month high.
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 47.0 in April, up from 45.3 in March.
The survey was conducted after US tariff announcements on 2 April, which, at the time, saw minimum tariff rates of 10% applied to imports into the US, as well higher so-called ‘reciprocal’ tariff rates on a number of countries. A subsequent announcement on 9 April saw a 90-day pause on most higher tariff rates.
The latest reading signalled a solid monthly fall in business activity, albeit one that was the least pronounced in 2025 so far.
Central to the latest reduction in output were falling new orders and uncertainty among customers.
The overall fall in activity was recorded in spite of a further marked increase in manufacturing production, with growth hitting a seven-month high. Retail posted the sharpest reduction of the four monitored sectors.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“The tracker this month reflects the challenges that economic uncertainty can create for UK businesses of all scales.
“Firms across Northern Ireland reported a challenging start to the second quarter, with demand for goods and services falling amid a backdrop of economic uncertainty and rising prices. Across the UK, the South West was alone in recording growth in business activity.
“It’s encouraging that firms are still looking to the future with some optimism, although growth expectations are lower than they have typically been in the past.
“Rising labour costs have added to pressure on businesses, following April’s increases in National Insurance contributions and minimum wages. As firms look to mitigate rising costs, we’ve seen average prices charged for goods and services increase at faster rates, as well as a greater focus on workforces. Labour markets in all areas of the UK have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April.
“We cannot ignore the backdrop during which this survey was carried out but regardless, as we’ve seen in the past and as the South West and Scotland illustrate, UK business is resilient and can always offer reasons for optimism throughout.”
The main findings of the April survey were as follows:
As has been the case in each month since last November, new orders decreased in the Northern Ireland private sector during April. The rate of contraction was sharp and faster than that seen in March.
Business confidence fell sharply in April and was the lowest in 28 months amid panellist reports of uncertainty around US trade policy. The latest data signalled only marginal optimism in the year-ahead outlook for business activity. Those respondents that were positive linked this to hopes for improving economic conditions and the signing of new contracts.
Outstanding business was depleted again in April as falling new orders meant that companies were able to work through backlogs. That said, the latest fall was modest and the slowest in the current seven-month sequence of decline. The slower drop in backlogs in part reflected a contraction in workforce numbers. Employment was down for the third month running, and to the largest extent since November 2020. Market uncertainty and efforts to limit costs were reportedly behind the reduction in staffing levels.
Increases in the National Minimum Wage and employer National Insurance contributions were cited as the main factors leading to a sharp increase in input costs during April. The pace of inflation was only marginally weaker than March’s 25-month high. Retail posted the fastest rise in input prices, closely followed by services. With input costs rising sharply again in April, companies increased their selling prices accordingly. Moreover, the pace of output price inflation quickened for the fourth consecutive month and was the strongest since December 2022. The rise in charges in Northern Ireland was the sharpest of the 12 monitored UK regions and nations.
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