Covid-19: NI economy recovering strongly, Ulster Bank survey suggests

Northern Ireland's economy continued to recover strongly in June but inflationary pressures are building in some sectors, the results of an Ulster Bank survey suggest.

The bank's monthly survey of private sector activity is considered to be a reliable indicator of the economy.

June was the first full month of trading for hospitality businesses under reduced Covid-19 restrictions.

It contributed to the sector's strongest performance in seven years.

Richard Ramsey, the chief economist for Ulster Bank in Northern Ireland, said there had been rapid recovery in the entire second quarter of the year, from April to June.

"Northern Ireland has witnessed its best quarter for private sector growth - both in terms of output and orders - since the third quarter of 2014 and the fastest rate of employment growth since the second quarter of 2014," he said.

However, he added that it was also the "worst quarter for inflationary pressures in the survey's history".

Firms in the construction sector are facing the biggest inflationary pressures as a range of Brexit-related and global supply chain issues force up the cost of building materials.

Mr Ramsay said firms were passing those costs on to their customers and he expected that "significant inflationary pressures will be a feature of the business environment for the rest of the year and well into 2022".

The UK's official rate of inflation in May was 2.1%, above the Bank of England's 2% target.

The Bank's Monetary Policy Committee, whose job is to control the rate of inflation, expects the rate to rise further to above 3% but only for a temporary period.

In its most recent inflation report, it said: "The committee's central expectation is that the economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth and inflation will fall back.

"There are two-sided risks around this central path and it is possible that near-term upward pressure on prices could prove somewhat larger than expected."