The Q4 21 QES findings continue to demonstrate positive signs of recovery in the Northern Ireland economy with a majority of members expecting their business to grow in 2022 (70%). However, inflationary pressures from mounting business costs including high raw material costs and pressure to raise wages are causing significant concern, particularly for manufacturers. Expectations to raise prices are highest on record with a greater share of businesses in Northern Ireland expecting to raise prices in the next 3 months compared to all other UK regions.
NOTE: These findings precede the emergence of the Omicron variant in December 2021 and the introduction of new restrictions as a result.
After reaching record lows across all key indicators in Quarter 2 2020 with the onset of the COVID-19 pandemic, almost 2 years on all key indicators are positive meaning more firms are reporting increases in sales, employment, confidence around turnover growth and investment intentions than those reporting a fall. By comparison, just one year ago in Q4 2020, almost all key indicators were negative. The share of businesses operating at full capacity rose to 45% in Q4 21 (39% Q3 21) for manufacturing and 50% for services (47% Q3 21) although over half of businesses are still operating below capacity. One in 3 firms however still remain negatively affected by the pandemic and 16% are just covering costs or are in difficulty. EU exit has also presented a new set of challenges in 2021 with largely negative trading consequences over the last year.
Despite this, more businesses are reporting increased UK sales (35%) in last 3 months compared to those reporting falling sales (18%). This is also the case with domestic order books for the next 3 months although the difference is less marked (31% report increased UK orders vs. 25% falling orders). Confidence is keeping up in spite of challenges, particularly around pressure to raise prices. Expectations to raise prices are highest on record (74% expect to raise prices in next 3 months) driven in large part by high raw material costs. Almost 2 in 3 (64%) members cite rising raw material costs as the main reason why they expect to raise prices.
Recruitment activity is continuing, however with that come challenges around getting staff as recruitment difficulties persist. Firms are increasingly under pressure to raise wages to retain and recruit staff, although investment in training has been picking up as a result.
In total. 215 members responded to the NI Chamber of Commerce & Industry Quarterly Economic Survey (QES), in partnership with BDO, for the 4th quarter of 2021. Together they account for over 26,000 employees in Northern Ireland.
The fieldwork for the Quarter 4 survey took place between 4 and 19 November 2021, twenty months into the COVID crisis during a period when almost all COVID restrictions were lifted (although this preceded the emergence of the Omicron variant of the virus in December 2021 which brought with it renewed uncertainty for the economy). This was also ten months into the beginning of new trading arrangements coming into place on 1 January 2021 following the end of the transition period post-Brexit.
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