The Growth Tracker says 51.4. Does that mean the economy grew by 51.4%?

No, and this is the single most common misreading of the survey. The Growth Tracker is a diffusion index, not a growth rate. S&P Global calculates it from the percentages of the roughly 200 firms on the panel reporting an improvement, no change or a decline. Fifty means no change on the previous month. Anything above fifty means more firms saw a rise than a fall, and anything below means the reverse. So 51.4 tells you that in July slightly more Northern Ireland firms grew output than shrank it. It tells you the direction and how widely that direction was shared. It does not tell you the size of the move in pounds, and a reading of 73.7 on input costs does not mean costs rose by 73.7%. Breadth and magnitude are different things, and conflating them is how a survey gets over-read.

Our July sales were fine. Why should the new orders number bother us?

Because output and new orders measure two different points in time. Output is work you already won, often months ago, being delivered and invoiced now. New orders are the work that will pay you next. In July output rose to 51.4 while new business stayed below fifty at 47.8, and backlogs of work fell again at 45.4. Read together, that pattern says Northern Ireland firms were busy delivering a book of work they are not refilling at the same rate. A good July on the profit and loss account is entirely consistent with a forward order book that has been shrinking all year, because the accounts report the past and the order book reports the future. If you only watch turnover, you find out roughly one order book in arrears, which is exactly too late to do anything cheap about it.

Input costs at 73.7 and prices charged at 63.9 — what is that gap actually telling me?

That costs are rising more widely across the panel than selling prices are. Both readings are well above fifty, so both are increasing, and both eased from June. But input costs have been running ahead of charges every month in the series, and the practical effect of that is margin. The gap is not a percentage you can lift straight into your accounts, because these are diffusion indices. What it does tell you is that firms across Northern Ireland are absorbing part of their cost increases rather than passing all of them on. On our illustrative firm above, costs rising two percentage points faster than prices took 11% of the operating profit in a single year, without turnover falling at all. That is what absorbing the gap actually costs, and it compounds annually if you let it.

Northern Ireland is worst of the 12 UK regions on cost inflation. Why does that matter if everyone is putting prices up?

Because your competitors are not evenly spread across the UK. In July, NI input costs read 73.7 against a UK figure of 66.1, and NI prices charged read 63.9 against 56.4 — the fastest of the 12 monitored UK regions and nations on both counts. If you sell only into a local NI market where every supplier faces the same pressure, that is survivable, because the whole market moves together. If you quote against firms in Great Britain, or across the border, you are carrying faster-rising costs and putting your prices up faster than the people you are bidding against. On a competitive tender that shows up as a widening price gap you did not choose and cannot see from inside your own numbers. Worth knowing which of those two markets your revenue actually comes from before you decide it is someone else's problem.

How do I get the order book into my monthly numbers?

Add one line: committed future work, expressed in weeks or months of cover rather than in pounds. Take the value of work you have won but not yet delivered, and divide it by your normal monthly delivery. A firm turning over £100,000 a month with £336,000 on the books has 3.4 months of cover. Track that single figure month by month and the trend does the work — a book falling by a tenth of a month every month is telling you something your turnover line will not say for another year. It does not need new software. It needs someone to write down what has been won and what has been delivered, every month, on the same basis. Our management accounts work builds this in as standard, because revenue on its own is a report on decisions you already made.

NI output grew in July. New orders didn't. And our costs are the worst in the UK.

Reacting to: Business activity returns to growth in July — Ulster Bank Growth Tracker (S&P Global / Ulster Bank) →

Northern Ireland's private sector grew again in July. The Ulster Bank Growth Tracker, compiled by S&P Global from the responses of around 200 local firms, put the headline Business Activity Index at 51.4, up from 43.9 in June — back above the 50.0 no-change mark for the first time in four months. Three of the four broad sectors grew, led by manufacturing. Only retail fell. Business confidence hit a four-month high, and employment steadied.

That is a genuinely better month and it deserves to be reported as one. But almost every write-up has led on the 51.4 and stopped there, and the two numbers underneath it point the other way. New business was still falling, at 47.8. Backlogs of work fell again, at 45.4. Put those three readings side by side and the July picture is not a recovery in demand. It is a busy month spent delivering a book of work that is not being refilled at the same rate. Output is the past. New orders are the future. Right now they disagree, and only one of them shows up in your management accounts.

What the survey actually found

The July readings for Northern Ireland, against the UK figure for the same month:

Output / activity: 51.4 (UK 51.6). Up from 43.9 in June and 43.3 in May. First rise in four months, but still slightly weaker than the UK average.
New business: 47.8 (UK 50.7). Up from 40.1 in June, so the decline eased markedly — but it is still a decline, and the UK as a whole crossed back above 50 while NI did not.
Backlogs of work: 45.4 (UK 47.7). Still falling markedly, though the pace of depletion eased to a three-month low.
Employment: 50.1 (UK 47.7). Broadly unchanged after a modest reduction in June. Only Scotland posted a stronger employment performance than Northern Ireland in July.
Input costs: 73.7 (UK 66.1). The slowest rise since February, but still rapid — and faster than anywhere else in the UK.
Prices charged: 63.9 (UK 56.4). A six-month low, but charges were still raised sharply, and the increase was the fastest of the 12 monitored UK regions and nations.

Sebastian Burnside, Chief Economist for Ulster Bank, called it “a much more encouraging picture”, noting that activity bounced back “helped by signs of stabilisation in customer demand” and that some firms were looking to expand staffing. He also said there were “continued reports of the difficulties faced in finding the right workers, which ultimately limited the extent to which companies were able to hire”. Around one-third of respondents were optimistic about the year ahead; 22% expect activity to fall.

What a diffusion index does and does not tell you

This matters before anyone starts quoting the numbers at a board meeting. These are diffusion indices. They are built from the proportion of firms reporting a rise, no change, or a fall. Fifty is no change. Above fifty means more firms went up than down.

So 73.7 on input costs does not mean costs rose 73.7%. It means cost increases were very widely shared across the panel — nearly everyone, not slightly. The index measures breadth, not magnitude. That distinction is the difference between a useful early warning and a number somebody has over-read into a business case. What it is genuinely good for is direction, momentum, and comparison between regions on a consistent basis. All three are useful here.

The number that should worry you is not the headline

Take an illustrative Ballymena engineering firm — not a client, and the figures are chosen to be easy to follow. It delivers about £100,000 of work a month. On 1 January its order book — work won but not yet delivered — stood at £420,000, or 4.2 months of cover. Through the year it has been winning about £88,000 a month of new work while continuing to deliver £100,000.

Here is what that does.

The book falls by £12,000 every month.
By 1 August it is £336,000 — 3.4 months of cover, down from 4.2.
Revenue in the accounts over those seven months: £100,000 a month, unchanged. Turnover is flat year on year. Nothing in the profit and loss account has moved.

The owner's monthly numbers have reported seven months of stability. The order book has quietly lost 0.8 months of cover over the same period. At that rate the book passes two months of cover around the middle of 2027 — and only at that point is the firm physically unable to keep invoicing £100,000 a month. The revenue line finally falls roughly eighteen months after the problem started. By then, fixing it means winning work in a hurry, which is the most expensive way to win it.

That is what a new business index of 47.8 alongside an output index of 51.4 looks like inside one company. The survey is telling Northern Ireland owners something their own accounts will not tell them for another year.

Northern Ireland is the most expensive place in the UK to run a business right now

This is the part that is genuinely regional, and it is the reason a UK-wide read of the same survey is misleading here. On both price measures, Northern Ireland was the fastest-rising of the 12 monitored UK regions and nations in July. Input costs at 73.7 against a UK reading of 66.1. Prices charged at 63.9 against 56.4. Panellists put the input side down to energy, fuel and raw materials, and reported suppliers' delivery times lengthening further, in some cases linked to shipping and geopolitical disruption.

If your customers are all in Northern Ireland, that is uncomfortable but survivable — the whole market is moving together and your competitors face the same bills. If you sell into Great Britain or across the border, it is a competitiveness problem. You are carrying faster-rising costs than the firms you bid against, and passing more of them through in price than they are. On a tender priced to three decimal places, that gap is not a rounding difference.

Putting numbers on the squeeze

Same illustrative firm, now on the profit side. Turnover £1.2m. Materials, energy and bought-in services £660,000. Wages and overheads £400,000. Total costs £1,060,000, so operating profit is £140,000, an 11.7% margin.

Now let costs rise 6% across the board while the firm manages to put prices up 4%. Both figures are illustrative, but the direction — costs rising faster and more widely than charges — is exactly what the survey has recorded every month this year.

Costs: £1,060,000 × 6% = £63,600 more.
Revenue: £1,200,000 × 4% = £48,000 more.
New operating profit: £140,000 + £48,000 − £63,600 = £124,400.

A two-percentage-point gap between cost inflation and price inflation costs £15,600, or 11% of the profit — with turnover up and not a single customer lost. That is operating leverage working against you: profit is the thin slice at the end, so a small gap lands on it disproportionately. To stand still, the firm needed a 5.3% price rise, not 4%. Most owners in that position believe a 4% increase was a decent result. It was an 11% profit cut.

What this means for a Northern Ireland owner specifically

Labour is a constraint, not a cushion. NI employment at 50.1 was beaten only by Scotland across the UK, and Burnside was explicit that firms wanted to hire and could not find suitable candidates. That is wage pressure on top of the energy and materials pressure, and it means you cannot assume you will be able to staff a recovery when new orders do turn.

Retail is still the outlier. Retail was the only one of the four broad sectors to fall in July. If you sell to NI consumers rather than NI businesses, the July rebound largely was not yours, and planning off the headline number would be a mistake.

Goods movements add a layer nobody else carries. The survey reports lengthening supplier delivery times UK-wide. Northern Ireland firms bringing goods in from Great Britain run that on top of the additional process those movements already require. Longer, less predictable lead times mean more working capital tied up in stock — which is a cashflow cost that never appears as a cost in the profit and loss account.

Four things to do this week

Put one new line in your monthly numbers: months of order-book cover. Work won but not delivered, divided by normal monthly delivery. If that line is falling while revenue is flat, you have the exact pattern the survey is describing, and you have found it roughly a year early.
Work out your own two numbers. What did your input costs rise by over the last twelve months, and what did your prices rise by? If there is a gap, the £15,600 above is the shape of what it is doing to you. Our cashflow and profit improvement work starts exactly here.
Look at how long your quotes stay open. With input costs rising at the fastest rate of any UK region, a quotation valid for 90 days is a bet on cost stability that this survey does not support. Shorten the validity period or build in a cost-variation clause.
Read the release itself rather than the coverage. The Ulster Bank Growth Tracker press release carries the full regional table, and nibusinessinfo.co.uk is where the NI support schemes are announced.

What is still uncertain, and when you will know

One month is one month. July follows three consecutive months of falling output, and a single reading of 51.4 does not establish a trend. The August Growth Tracker lands next month, and the number to watch is not the headline — it is whether new business crosses 50. Until it does, output growth is the order book being consumed rather than replaced. That single figure will tell you more about the second half of the year than the activity index will.

The confidence Burnside describes is conditional. He linked the possibility of stronger performance in the second half to “increased domestic political stability” supporting confidence, and said that should this optimism continue, we may see a better second half than first. That is a forecast resting on a condition, not a prediction. Mark Crimmins of Ulster Bank framed it the same way: if these positive trends strengthen. Treat the recovery as contingent when you plan, and do not commit fixed costs against it.

Where we come into this

None of this needs a new system. It needs the forward book measured monthly alongside the revenue, and the gap between your cost inflation and your price inflation calculated once a year instead of felt slowly.

Our management accounts put both of those in front of you every month rather than every twelve. Our cashflow and budgeting work models what a shrinking order book does to cash before it does it. And our Ballymena office covers the whole of Northern Ireland, including the cross-border and GB-tender pricing questions a firm based anywhere else will not raise with you. If you want a straight answer on whether your margin is being quietly eroded, that is a conversation, not a project.