New orders start falling as business prepares for 2019

The latest data for December contained in the Ulster Bank Northern Ireland PMI report says that business activity and employment continued to rise solidly, albeit at weaker rates than in November.

However, it also shows that services firms saw orders fall for the first time in 26 months and construction orders fell for the fourth month running.

“According to the PMI surveys, Northern Ireland was the second fastest growing region in the UK in Q4 2018; although it should be noted that Q4 was Northern Ireland’s weakest quarter for growth in output and new orders in nine quarters,” said Richard Ramsey, chief economist for Northern Ireland at Ulster Bank.

“Northern Ireland may have climbed the regional rankings for output growth but remains rooted to bottom spot for future output, in 12-months’ time.”

He said manufacturing remained the star performer with output and employment growth accelerating in Q4.

Staffing levels grew at the fastest rate in over three-and-a-half years, and the last quarter marked the fastest rate of manufacturing output growth in over four years.

“Elsewhere the theme is one of slower or subdued growth and decline,” he said.

“Service sector output decelerated in each of the last five quarters with the latest period the slowest rate of growth in nine quarters.

“Meanwhile construction and retail posted outright declines in activity/sales in Q4.”

Construction orders continue to fall which he said was unsurprising, given the “logjam” of public sector projects.

“Construction firms expect activity to be even lower in 12-months’ time.

“While construction firms are the most pessimistic, retailers’ confidence for the year ahead has also fallen to new lows.

“Indeed, the fact that new orders stagnated in Northern Ireland’s private sector in December doesn’t bode particularly well for the start of 2019.

On a slightly more positive note, export orders picked up marginally in December, albeit that growth remained modest.

“Perhaps more significantly, inflationary pressures eased in December with input costs rising at their weakest pace since August 2017.”

Retailers and manufacturing firms were seeing their costs rise at the slowest pace in more than two-and-a-half years, he added.

“That said, Northern Ireland continues to have the highest rate of input cost inflation in the UK.”