Northern Ireland’s private-sector activity returned to growth in July after falling sharply the previous month, offering a more positive economic backdrop for businesses and workers in Armagh as the second half of 2026 began.
The latest Ulster Bank Regional Growth Tracker recorded a Business Activity Index of 51.4 in July, up from 43.9 in June. A reading above 50 indicates growth, making July the first month in four that the index had risen into expansion territory.
Manufacturing leads the recovery
Surveyed businesses said customer demand appeared to be improving where output increased. Three of Northern Ireland’s four broad sectors reported higher output, with manufacturing recording the strongest performance. Retail was the only sector to report a fall.
Despite the improvement, Northern Ireland’s expansion remained slightly weaker than the UK average. New orders continued to decline during July, but the rate of decline was slower than in June. Some firms also reported stronger market confidence.
Business confidence reached a four-month high. The report linked the more positive outlook to healthy pipelines of work and planned investment, suggesting some companies were preparing for stronger conditions ahead.
Jobs stabilise but recruitment remains difficult
Employment was broadly stable. Some firms were looking to increase staffing levels, while others said they could not find candidates with the right skills or experience. That recruitment difficulty limited the extent to which businesses could hire.
Backlogs of work continued to fall significantly. Supplier delivery times lengthened, however, with shipping delays sometimes connected to wider geopolitical issues contributing to the disruption.
Sebastian Burnside, Ulster Bank’s chief economist, described the figures as a “much more encouraging” picture of Northern Ireland’s private sector. He said activity had bounced back into growth territory after difficulties in May and June, helped by signs that customer demand was stabilising.
Inflation continues to pressure businesses
Cost pressures showed some signs of easing. The rate of input-cost inflation continued to weaken from the recent peak recorded in April, and the latest increase in input prices was the slowest since February.
However, costs were still rising rapidly and at a faster pace than in other parts of the UK. Output-price inflation reached a six-month low, but businesses continued to increase their charges sharply, again at a higher rate than other UK regions.
Mark Crimmins, Ulster Bank’s managing director for corporate, commercial and business banking, said inflation remained challenging but that slower increases and higher output had created a more favourable environment for firms.
The report points to a cautiously improved regional outlook rather than a settled recovery. Burnside said stronger performance in the second half of 2026 could follow if the renewed optimism continues, while the tracker indicated that businesses still face pressure from costs, recruitment, orders and supply chains.
