The latest Ulster Bank Regional Growth Tracker pointed to ongoing job creation in the Northern Ireland private sector as rates of contraction in output and new orders softened. Meanwhile, firms recorded sharper increases in both input costs and selling prices.
The headline Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s private sector – rose to 48.6 in October from 44.9 in September, signalling a much slower fall in output over the month. Nonetheless, business activity has decreased continuously on a monthly basis since June.
Muted customer confidence and tight budgets were among the factors behind the reduction in output, according to respondents.
Renewed increases in output were seen in the manufacturing and services categories, while activity fell in construction and retail.
Sebastian Burnside, Chief Economist for Ulster Bank, commented:
“There were signs of recovery in the Northern Ireland private sector in October as rates of decline in output and new orders eased over the month. In fact, both the manufacturing and services sectors posted renewed expansions in business activity. Meanwhile, companies remained optimistic that output will rise over the coming year.
“This confidence in part helped firms to maintain hiring activities, despite reduced workloads. Employment rose for the fifth month running, with Northern Ireland the leading light across the UK in terms of job creation.
“The sustainability of job creation was put in doubt by the inflation picture, however, with companies mainly linking higher operating expenses to wage pressures. Both input costs and output prices increased at faster rates during October.”
The main findings of the October survey were as follows:
Northern Ireland companies posted a further reduction in new business in October, extending the current sequence of monthly reductions to a year. The latest fall was only modest, however, and the joint-weakest since last November (alongside May 2025). In some cases, panellists indicated that inflationary pressures had limited demand. Although new orders continued to fall in October, expectations for growth over the coming year supported optimism in the outlook for business activity. That said, sentiment eased to a six-month low amid challenging market conditions.
Northern Ireland companies continued to increase their staffing levels in October, the fifth month running in which this has been the case. The rate of job creation was slight, but faster than in September. Northern Ireland was one of only three areas of the UK to post a rise in employment (alongside London and the North East of England). In some cases, workforce numbers increased amid expected new order inflows in the months ahead, while others mentioned the hiring of apprentices.
Higher staffing levels meant that firms were able to reduce backlogs of work again in October as new orders decreased. The rate of depletion was marked, but softer than seen in September. Paperwork requirements as a result of Brexit caused a further lengthening of suppliers’ delivery times. Vendor performance deteriorated rapidly, and to the greatest extent since January 2023.
The rate of input price inflation quickened in October, with a number of firms linking higher operating expenses to rising wages. The increase was the fastest in three months, and the sharpest of the 12 monitored UK regions and nations. Overall, output charges rose at the fastest pace since July as companies passed higher input costs through to customers. As was the case with input prices, the pace of inflation in charges in Northern Ireland was the sharpest of the 12 areas of the UK.