Output and new orders continue to expand solidly

The report points to further solid increases in output and new orders reflected in rising staffing levels, despite input cost inflation rising to a six-month high.

Seasonally adjusted Business Activity Index rose to 54.3 in November from 53.8 in October with new business also increasing at a faster pace.

Construction posted the sharpest rise in employment in the nine-year series history, while manufacturers reduced staffing levels slightly.

“Despite Northern Ireland’s political situation and ongoing uncertainty linked to Brexit, business conditions remain encouraging,” said Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank.

“Private sector firms saw a pick-up in activity, new orders, employment and exports in November. Indeed, local firms reported faster rates of growth in job creation and orders than their UK counterparts.

“With just one month remaining, it is clear that 2017 has been a very good year for Northern Ireland’s private sector.

“The rates of growth in output, new orders and employment are all higher in 2017 than the previous year and represented the fastest rates of growth in three years.

“Export orders are broadly in line with 2016’s rate of expansion - which was the strongest growth rate in 12 years. However, it should be noted that the pace of export growth has slowed in each of the last four quarters. Sterling’s post-EU referendum depreciation has provided a major boost for export price competitiveness. In recent quarters, however, the pick-up in new orders growth has been due to the domestic market (UK), which outperformed the export market in recent months.

“On a more negative note, 2017 has witnessed a surge in inflationary pressures. Input cost inflation hit a six-month high in November with retailers experiencing an 80-month high. 2017’s cost pressures are the most intense that businesses have faced in six years. Pressures on margins have meant the prices charged for goods and services have been increased significantly. Output price inflation in 2017 has been the most marked in the last 15 years.

“Overall, the Northern Ireland private sector moves into 2018 with considerable momentum, but there is also no shortage of challenges ahead; not least inflation, which will increasingly squeeze consumers; the local political deficit; and the ongoing Brexit negotiations, the more challenging phase of which lies ahead. The next 12 months will be both an interesting and critical time for the Northern Ireland economy.”