Firms start 2018 on a positive footing

Author

David Roberts, Invest NI Economist
Feb 15, 2018

Much is being made in the media of the uncertainty linked to the ongoing Brexit negotiations. In a time of change it is even more important than normal for Invest NI to monitor business activity and sentiment locally.

The quarterly Invest NI Purchasing Managers Index (PMI) provides an up-to-date snapshot of business conditions and levels of confidence.

Higher new orders were the most commonly cited reason for the growth in output.

The latest PMI results show firms entering 2018 on a generally upbeat note. The output index reached 62.9 (where 50 = no change) with companies of all sizes reporting increases in activity. Compared to the previous quarter, the index fell back slightly but this was from the highest level since the index began in 2014. Higher new orders were the most commonly cited reason for the growth in output.

Output for all businesses

Output graph for all businesses

Other indicators from the latest Index include:

  • Almost a third of firms secured higher export orders in the final quarter of 2017, with strong demand coming from the Republic of Ireland as well as from far flung markets in South East Asia
  • Higher levels of business activity also translated into more jobs at the end of 2017
  • Almost 5 times as many firms reported an expansion in employment as those recording a decrease
  • Medium sized* companies experienced the biggest increase in jobs – an encouraging sign that growth is broadly based

With input prices continuing to rise sharply, firms faced further competitive pressures. Some businesses reported being able to pass on higher costs to customers, others lowered prices in the face of strong competition. Inflation is forecast to ease in 2018 which should help. In any event, firms should continue to look closely at their supplier and customer relationships and remain open to new ways of working.

When it comes to the future, the firms which we work most closely with remain strongly optimistic. More than three quarters of firms predicted a rise in activity in 2018, with just 2% of businesses anticipating a fall.

- David Roberts, Economist, Invest NI

Future activity - all businesses

Future activity graph - all businesses

Overall, these survey results indicate that many firms are in good shape at the start of 2018. If the last 18 months or so has taught us anything, however, it is that we should expect the unexpected and that change can happen very quickly. We will continue to work as a Trusted Business Partner with our customers to ensure that they are equipped to navigate the challenges ahead and to optimise opportunities for growth.

Further reading
Growth of new business hits new record high

*A medium sized company is defined as having between 50 and 250 employees

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