PMI: Lifting Covid Restrictions Record Northern Ireland’s Best Quarter of Growth in Seven Years
THE lifting of Covid-19 restrictions saw the northern private sector record its best quarter of growth in seven years, according to the latest Ulster Bank business survey.
The June Purchasing Managers Index (PMI) showed signs of a rapid recovery in both production, new orders and employment in the second quarter of 2021.
New orders increased for the third consecutive month, with the fastest rate of expansion since July 2014.
But Northern Ireland’s businesses have experienced the worst quarter of inflationary pressures in the PMI’s 19-year history.
The monthly survey, which is based on the experiences of 200 private companies in the manufacturing, construction, retail and service sectors of the North, showed no slowdown in accelerating input costs. for businesses in June.
Rising commodity and transport prices were widely reported in the survey, reflecting issues with global supply chains and Brexit.
Rising costs are particularly felt in the construction and retail sectors, with companies raising their selling prices accordingly, leading to record levels of producer price inflation.
“It has been an all too familiar story in 2021,” said Richard Ramsey, chief economist at Ulster Bank.
“Businesses are passing these increased costs on to their customers at record rates. Again, construction companies, followed by retailers, show the largest price increases.
“Supply chain disruption and significant inflationary pressures are expected to be a feature of the business environment for the remainder of the year through 2022.”
The economist said that while the PMI index reflected strong quarterly growth in the northern private sector, the pace of expansion of business output and employment slowed from May to June.
“All sectors have seen their job creation rates decline, as the construction workforce shrinks.
“But services were the only sector to report a pickup in business activity in June.”
Service companies recorded their fastest rate of growth in business activity in more than seven years.
“This was not unexpected given that June was the first full month the hotel industry was open since the lockdown restrictions eased,” Ramsey said.
According to the PMI, the combination of growing demand and difficulties in securing materials has led companies to increase their backlogs at the fastest rate in the survey’s history.
Supplier delivery times also lengthened considerably in June, with Brexit as the common thread.
The survey also hinted at how the Republic’s supply chain adjusted to Brexit.
Demand for goods from Northern Ireland continued to accelerate across the border in June.
The US, Dutch and German markets also posted strong growth last month, reflecting a vastly improved picture of the economic health of northern export markets.