December brings strongest rise in output for a year

Northern Ireland ended 2017 on a high according to the latest data from the Ulster Bank Northern Ireland PMI report as a marked expansion in new orders saw stronger job creation and a build up in backlpogs of work.

The figures for December The latest report - produced for Ulster Bank by IHS Markit - signalled faster rises in output and new orders at the end of 2017.

The headline seasonally adjusted business activity index ended 2017 with its highest reading of the year, posting 56.9 in December from 54.3 in November.

The rate of expansion in new orders accelerated to a 40-month high in December, with new business up substantially. New export orders also rose at a faster pace as sterling weakness helped firms to secure new business from the Republic of Ireland. The increase in new business from abroad was the strongest recorded in 2017.

“Northern Ireland’s private sector ended 2017 on a high,” said Richard Ramsey, chief economist for Northern Ireland at the Ulster Bank.

“Private sector output and export orders both recorded their fastest rates of growth in a year. Meanwhile order books as a whole - i.e. UK demand alongside exports - expanded at their fastest rate in forty months.

“The latter bodes well for further growth in business activity and employment opportunities in 2018. Local firms, most notably manufacturers, are benefiting from a pick-up in the global economy and the enhanced price-competitiveness resulting from sterling’s weakness.”

Retailers, he added, had also been benefiting from the exchange rate via increased cross-border trade.

“Despite robust demand though, it is interesting to note that retail was the only sector not to report increased staffing levels in the latest survey.

“Arguably this reflects a degree of nervousness with regard to the expected squeeze on consumer spending.

“Construction, on the other hand, reported the fastest rates of job creation and business activity accelerated to a 22-month high. Meanwhile, services saw new orders rise at the fastest rate in 21-months, though the rate of job creation in the sector eased slightly.

“Looking at last year’s business performance as a whole - output, orders and employment growth increased in 2017 at their fastest rate in three years. Export orders matched 2016’s growth rate which was a 12-year high.”

Optimism among companies in Northern Ireland strengthened to a three-month high as close to 35% of respondents predicted an increase in output over the coming year.