NI Chamber Quarterly Economic Survey: “Pockets of resilience and success” –however bigger picture is one of slow economic growth   

 NI Chamber

8 January 18, Mandatory Credit ©Press Eye/Darren Kidd

The Northern Ireland economy continued to show signs of growth in the last quarter of 2017 with both the manufacturing and services sectors recording positive balances in sales and jobs with a particularly strong export orders book for local manufacturers.

That was one of the findings of the latest Quarterly Economic Survey (QES) published today (16 January 2018) by Northern Ireland Chamber of Commerce and Industry (NI Chamber) in association with business advisors BDO.

According to the report for Q4 of 2017, Northern Ireland does however remain one of the weakest performing UK regions overall – with manufacturing investment intentions weakest across the 12 UK regions and both manufacturing and services sectors facing a precarious cash flow position.

Meanwhile, political instability remains a key concern for businesses here with frustration at the lack of a functioning executive, whilst a growing share of businesses are putting growth and investment plans on hold as a result of Brexit.

Against this background almost half (46%) of businesses expect the NI economy to contract in 2018 with 33% forecasting it to grow. Businesses are more optimistic about their own prospects for the year ahead with 64% expecting their firm to expand.


Manufacturers export orders book remained strong in Q4 2017, with Northern Ireland having one of the strongest export orders balances across the 12 UK regions. Domestic (UK) sales and orders improved in Q4 although Northern Ireland’s regional performance is one of the weakest for these balances. Employment expectations have been falling since the start of the year. NI is the only UK region with a negative cash flow balance meaning a greater share of manufacturers reporting a deteriorating cash flow position in Q4 than improving. Investment intentions are also weakest across the 12 UK regions among NI manufacturers.


The service sector continued its lacklustre performance in Q4. Despite almost all key balances being positive, suggesting some growth, the domestic sales and orders balances continued the downward trend experienced since Q4 2016.   NI is the only UK region with negative export balances in Q4 meaning more businesses reporting a fall in export sales and orders than those recording an increase.  Employment expectations are subdued and the sector’s cash flow position is also very weak.  Pressure to raise prices among NI’s service sector is one of highest recorded across UK regions (45% vs. UK 36%).

Business Confidence

Business confidence is significantly higher among manufacturers compared to services in Q4 2017. A balance of +56% of manufacturers compared to +31% of services expect turnover to improve over the next 12 months.  Manufacturing confidence is at its highest recorded over the last 2 years while services is at its lowest recorded.

Exchange Rates

Exchange rates concerns persisted during Q4 2017. In Q4 55% of members said that exchange rates were more of a concern than 3 months ago (58% in Q2). This figure was just 19% two years ago. Northern Ireland’s manufacturing and services sectors are more concerned about exchange rate pressures compared to any other UK region.

Brexit Watch

The latest Brexit Watch suggested that there is a small core of businesses that have felt an impact from the UK’s vote to leave the EU. Around 1 in 5 have stated that turnover has fallen because of the result.  Almost half of businesses are experiencing an increase in costs particularly rising raw material costs for manufacturers.  It has been a more mixed response for exporters with 7% seeing a boost to export while for 11% exports have fallen.

Almost 1 in 3 (31%) have scaled back/put on hold growth and local investment plans because of Brexit while 11% have expanded growth plans.  Around 1 in 5 (17%) have expanded investment plans outside NI in light of the vote, although 15% have scaled back/put on hold plans to expand outside NI.

Business prospects for 2018

Two-thirds of members expect their own business/organisation to grow during 2018 but only 1 in 3 expect the wider NI economy to grow over the year.

Some 33% expect the economy to grow (29% marginally) in 2018 while 46% expect if to contract (10% strongly).  They are more positive about prospects for their own business/organisation with 64% expecting to grow during 2018 (12% strongly) while 20% expect their business to contract.

Brexit is the most pressing concern for members in 2018 leading to uncertainty which is impacting on buyer confidence and investment plans.  Linked to this, foreign exchange rates are impacting on costs and ultimately putting pressure on prices.  Political instability is also a key concern with businesses expressing frustration at the lack of a functioning Executive.

Workforce skills/availability will also cause difficulty for some members in 2018.  General cost pressures on business were raised as an issue, particularly staff costs including pension and pay increases.

Commenting on the survey results, Ann McGregor, Chief Executive of NI Chamber, said: “Despite pockets of resilience and success, and strong results for some firms, the bigger picture is one of slow economic growth amid uncertain trading conditions.  Continued uncertainty over Brexit and the burden of upfront cost pressures facing businesses is likely to stifle business investment and put pressure on prices in an already challenging inflationary environment.

“The continued weakness in the UK’s productivity, and especially Northern Ireland’s, remains a key concern and reflects the lack of progress in dealing with some of the deep-rooted structural problems in the economy – from skills gaps to creaking physical infrastructure. However without an Executive in place at Stormont it is difficult to address these challenges, and the survey reveals the continued frustration of our members at the lack of a functioning Executive. We cannot face 2018 without a government where Northern Ireland Ministers take decisions on Northern Ireland matters.”

Brian Murphy, Managing Partner at BDO Northern Ireland, said: “The continued growth of the manufacturing and services sector in Northern Ireland is reassuring and should give comfort to those who remain apprehensive about the future. That nearly two-thirds (64%) of local businesses expect their firms to expand over the coming year is both welcome and encouraging.

“That is not to ignore the concerns that some may have. Without doubt, the challenges we in Northern Ireland face in respect of the uncertainty surrounding Brexit and the continued absence of a functioning Executive are many. However, this survey provides demonstrable proof that our local entrepreneurs are creative and resilient and are simply getting on with business.”

Q4 Infog_Print

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