Northern Ireland has seen its fastest pace of growth across the private sector in almost seven years, according to one fresh survey.
Economic output and new orders have risen at their fastest rate here across the private sector since the third quarter of 2014.
Meanwhile, employment growth is also rising at its fastest rate in almost the same period, according to the latest Ulster Bank purchasing managers’ survey for June. However, the growth is coming from a low base, following protracted lockdowns and a shutting down of much of the economy last year.
“The end of the second quarter of the year saw further strong increases in output and new orders as the loosening of Covid-19 restrictions continued,” the latest report said. “Inflationary pressures intensified further, however, with input costs and output prices both rising at the fastest rates on record.”
Those responding to the survey said the lifting of Covid-19 restrictions and higher new orders were behind the expansion in activity. The service sector registered the fastest increase in activity, closely followed by manufacturing.
“Northern Ireland has witnessed its best quarter for private sector growth – both in terms of output and orders – since quarter three 2014 and the fastest rate of employment growth since quarter two 2014,” Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said.
“Looking specifically at June’s survey, firms once again recorded strong rates of growth in output and employment in the month, albeit the pace of expansion eased relative to May.
“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.
“The robust rates of growth look set to continue in the short-term with order books filling up fast. New orders increased at their fastest pace in almost seven years, led by the services sector. Construction also posted its first rise in orders in seven months.
Looking ahead however, while business sentiment dipped to a three month low in June, firms remained strongly optimistic that output will rise over the coming year, with the further reopening of the economy post-Covid.
However, it was also the worst quarter for inflationary pressures in the PMI survey’s history.
“Rising demand coupled with ongoing supply chain disruption led firms to increase their backlogs of work at the fastest pace in the survey’s 19-year history,” Mr Ramsey said.
“Suppliers’ delivery times lengthened significantly in June with Brexit invariably cited for these delays. Meanwhile inflationary pressures continued to intensify with firms’ input costs – raw materials, wages, shipping costs – rising at a record rate.
“This has been an all too familiar story during 2021. Firms in the construction industry posted the steepest rates of input cost inflation with the index hitting 97.5. 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.”