Economic activity shrinks further in Northern Ireland for 10th consecutive month

Ulster Bank survey showed Northern Ireland economy was one of just two regions of the UK to see activity shrink in August

Activity in the Northern Ireland private sector has slowed for the tenth month in a row, Ulster Bank’s PMI index has shown.

Business activity dropped to a four-month low last month on the back of a fall in the volume of new orders linked to lower customer spending, with the manufacturing sector recording the sharpest decline.

Business confidence also fell during August with muted demand and limited public sector funding said to be to blame.

Of note, Northern Ireland was one of only two regions in the UK where output fell last month, alongside Yorkshire and Humber. On the upside, it was the only region to record an increase in staffing levels, although the pace of increase has eased.

“Northern Ireland’s private sector struggled to gain momentum in August, as customer caution led to reductions in new orders and business activity,” Sebastian Burnside, Chief Economist for Ulster Bank, said. “The picture in Northern Ireland was gloomier than across the UK as a whole, where new orders returned to growth.

“Employment remained a bright spot as firms continued to take on extra staff, looking to rebuild capacity and secure a greater range of skills after having faced struggles recruiting staff in previous years.

“Inflationary pressures showed signs of softening. Input costs increased at the slowest pace in 2025 so far, providing some respite for firms. Where costs did rise, wages were again a key feature of company reports.”

The Ulster Bank Region Growth Tracker also showed that a combination of high employment and lower new orders meant that companies were able to reduce backlogs of work for the eleventh month running in August.

The rate of depletion was marked and the fastest since February. Meanwhile, companies reported another lengthening of supplier lead times in August, the second in as many months. That said, the deterioration in vendor performance was less pronounced than in July. Some firms linked delays to issues resulting from Brexit.

Companies in Northern Ireland continued to face sharp increases in input costs during August, with the pace of inflation remaining above the series average. This was despite the latest rise being the least marked in 2025 so far. Panellists often linked increased input prices to higher staff costs. The passing on of rising input prices to customers resulted in a further increase in output charges during August. Here too, however, the pace of inflation eased and was the weakest since February.