Posted on Monday 13 January 2014 by Ulster Business
The latest report – produced for Ulster Bank by Markit – pointed to a further solid expansion of business activity in December, linked to another strong rise in new orders.
Increased workloads led to an accumulation of outstanding business and the fastest rise in employment in more than six years, while both input costs and output prices increased at sharper rates than seen in November.
The PMI reports have shown increasingly positive movement by local businesses, which alongside other improving economic indicators has raised the hopes of a strong recovery.
Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: "The Northern Ireland economy ended 2013 in a lot better shape than it began the year. Indeed, last year can be viewed as a game of two halves. During the first half of 2013 local firms reported falling levels of output, orders, exports and employment.
"However, the summer heralded the start of a strong, broad based recovery with all sectors experiencing a significant improvement in these indicators. As a result, 2013 marked the first year of growth in employment, new orders and business output in 6 years. As far as private sector output growth was concerned, 2013 also represented the first time since 2007 that Northern Ireland was not at the foot of the UK regional performance table.
"Overall, the Northern Ireland economy is estimated to have grown by at least 1% in real terms. 2014 should see even stronger rates of growth of at least 1.5%. The latest PMI for December signalled a moderation in the rate of growth in business activity. However, an easing in the pace of growth relative to earlier months was inevitable sooner or later. All sectors posted strong rates of growth in new orders and business activity in December and this bodes well for 2014. To date the rise in new business orders has been largely due to increasing demand from Great Britain rather than export markets such as the Republic of Ireland and markets further afield. Last month however, local firms reported their fastest rate of growth in export orders since October 2007. This is probably linked to improving economic conditions in our largest export market – the Republic of Ireland.
"The most encouraging aspect of the latest survey concerns employment. Last month local firms saw their staffing levels increase at their fastest rate since the beginning of the credit crunch in August 2007. All sectors of the economy increased staffing levels in December. However, the pick-up in the rate of job creation was due to the retail industry and the wider services sector in particular. Local retailers increased their staffing levels at their fastest rate since the survey began. Whilst job numbers in the wider service sector are rising at their fastest rate in 6 years.
"The road ahead looks much more promising than it did this time last year. However, not all business conditions have improved over the last 12 months and the economy is not without significant challenges. Inflationary pressures are a growing concern across all sectors particularly manufacturing. Rising wage costs, a sign of economic recovery as pay rises return, is cited as a factor. That said, unlike this time last year, firms now have a degree of pricing power and can pass some of these costs onto their customers."