Ulster Bank PMI: Northern Ireland economy continues to grow but momentum weakens

Businesses in Northern Ireland continue to create jobs at an impressive rate, but the economy’s recent meteoric growth is starting to wane.

These are the findings of Ulster Bank’s latest Purchasing Managers’ Index (PMI) report which showed the private sector rebounding from the pandemic is losing momentum.

Its activity index fell to 52.1 in August from 54.1. Any reading above 50 indicates an increase in production, with last month’s increase being “the lowest in the last streak”.

The PMI takes the temperature of businesses across Northern Ireland and found that output in manufacturing and services rose while falling in construction and retail.

“Most parts of the UK saw business activity grow at a slower pace in August, and Northern Ireland was no exception,” said Richard Ramsey, Ulster’s chief economist. Bank in Northern Ireland. “Last month marked the weakest growth rates for local businesses in production, orders and employment in five months. But a two-speed recovery appeared in August at the sectoral level.

“Manufacturing and services companies saw some loss of momentum in August, but still recorded reasonable growth rates in production and orders, while the workforce continued to increase at a healthy pace. But retailers joined construction in contraction territory, with sales and orders falling.Retail hiring continued last month.

The revival of activity in the services sector was blamed on the further easing of restrictions put in place during the Covid-19 pandemic.

Meanwhile, employment continued to grow at a healthy pace, with companies increasing their workforces in line with the increase in new orders.

However, backlogs continued to pile up amid reports of staff shortages and supply chain issues – lead times from suppliers again lengthened significantly.

“Elsewhere, the survey once again revealed an all-too-familiar story, with inflationary pressures and lengthening delivery times from suppliers. In the UK, Northern Ireland continues to see the steepest rises in input costs, with local businesses raising the prices of their goods and services at a faster rate than any other region.

“Price pressures related to raw materials, fuel, freight, wages and Brexit continued to be cited by survey respondents. Inflationary price pressures in August eased only slightly from their recent highs, although service companies have been raising prices at the fastest rate in 13 years.

Looking ahead, businesses need to overcome a number of challenges, Ramsey said.

“In the meantime, businesses will continue to face inflationary challenges, supply chain disruptions, skills shortages and adjusting to Brexit. But as we saw last week, the increase in taxation in 2022 will further increase the growing burden of business costs.

Pat R. Madsen