Northern Ireland's manufacturing sector continues to drive impressive economic performance, outpacing other regions of the UK, according to the latest Ulster Bank Growth Tracker survey.

In August, Northern Ireland manufacturers saw significant increases in new orders, leading to a sharp rise in employment, with staffing levels expanding at the fastest rate in 16 months. Despite this, capacity pressures remained a challenge as firms struggled to reduce backlogs of work.

Sebastian Burnside, NatWest Chief Economist, remarked:

"The manufacturing sector in Northern Ireland showed no signs of slowing in August, continuing to outperform all other UK regions in terms of output growth. This growth was reflected in the strong rise in production, new orders, and employment, making manufacturing a key driver of the region’s economic expansion.

"Businesses were quick to respond to the surge in demand by ramping up hiring, achieving the most significant increase in staffing since April 2023. Yet, the influx of new orders was so rapid that it outpaced firms' capacity to clear existing backlogs, which continued to grow substantially.

"Manufacturing led the charge, but services also performed well, while the retail sector faced a downturn, with sales declining. Within manufacturing, rising staff costs and higher wages for existing employees further fueled inflationary pressures, pushing up input prices to levels unmatched across the UK.

"On a brighter note, there was a notable increase in new export orders for the first time in over a year, indicating that international demand is beginning to contribute to the sector's growth.

"Despite these pressures, local firms remain optimistic about the future, and given the strong momentum in the manufacturing sector, it's easy to see why."

Key findings of the August survey include:

• The headline Business Activity Index rose to 55.7 in August, indicating a sharp increase in Northern Ireland’s private sector output, driven largely by manufacturing.

• Manufacturing production saw its fastest growth in nearly two-and-a-half years, significantly outpacing other sectors. Services also expanded, while retail posted a decline.

• Employment in the manufacturing sector continued to rise, marking 20 consecutive months of job growth. However, the increase in staffing was not enough to address the rising backlogs of work, which grew at the fastest rate since April 2022.

• Input prices continued to climb, with rising staff costs cited as the primary driver, particularly within manufacturing and construction. Despite this, companies passed these costs on to customers, resulting in a slight increase in output price inflation.

Northern Ireland’s manufacturing sector remains a robust force, contributing to the region's overall economic success while navigating the challenges of growing demand, rising costs, and capacity pressures.​