Employment in Northern Ireland has dipped for first time in four years, a business barometer shows, adding to the sense that the private sector is battening down the hatches as it tries to limit overheads before April’s increase in employer national insurance contributions.
But the latest Ulster Bank regional growth tracker (previously known as the PMI) revealed that business confidence regained some ground in February, with manufacturers particularly bullish in the outlook.
And that mirrors some of the findings in separate analysis from Danske Bank, which showed that consumer confidence edged up in the fourth quarter of 2024 as people feeling more optimistic about their current and future finances.
The Ulster Bank growth tracker signalled ongoing reductions in business activity locally, where a fall in staffing levels came after a prolonged period of job creation.
Firms scaled back their workforce numbers for the first time since 2021, in part due to efforts to limit overheads.
The headline Business Activity Index, which measures the month-on-month change in the combined output of the local private sector, read 44.9 in February, a touch lower than the reading of 45 in January and below the 50 no-change mark for the third month running.
Three of the four categories covered by the report saw activity decrease in February. The sharpest contractions were in construction and retail, while services activity fell for the first time in 16 months. But manufacturing production continued to expand.
NatWest chief economist Sebastian Burnside said: “Both input costs and output prices rose at the sharpest rates in almost two years, with costs up more quickly in Northern Ireland than anywhere else in the UK.
“The overall downturn continued to be driven by the construction and retail categories, but there were signs of emerging weakness in services as well.”
Meanwhile Danske Bank’s quarterly consumer confidence index rose by four points to 132 between last October and December as people also reported improved expectations of spending on high-value products.
It said optimism over the region’s political stability and the lower rate of inflation also contributed to the brighter outlook.
Its analysis showed sentiment increased by 18 points over the course of the year, reflecting consumer resilience in the face of underlying challenges, including the lingering impact of higher prices and higher interest rates.
Confidence was around 9% above the survey’s long-term average, with a notable boost coming from the improvement in sentiment regarding current finances, which reached a three-year high in the final quarter of 2024.
Danske Bank economist Hannah Martin said: “Consumer confidence rose at the end of 2024 following the loss of momentum in quarter three, as people felt more positive about their current and future finances.
“Most of the 1,000 survey respondents reported that they expected to spend the same amount, or more, on higher value-items such as furniture or holidays over the coming year, with lower inflation and rising wages both adding to their spending power.”
