Activity in Northern Ireland’s private sector is continuing to slow markedly as the twin threats of soaring inflation and a wider economic slowdown bite hard.
That’s according to the latest PMI index which revealed the seventh successive monthly drop in output and an accompanying fall in new order for companies across the province.
Although the Business Activity Index rose to 46 in November from 44.4 in October, it still underlined a reduction in output across the private sector, although the latest fall was the softest since May.
Also offering a modicum of cheer is the fact inflation does appear to be softening with both input costs and selling prices rising at the weakest rates in 21 months. However, other positives may be difficult to find next year, Richard Ramsey, Chief Economist at Ulster Bank, said.
“Overall, the local private sector is coming to the end of 2022 in a weakened state, with 2023 likely to be a very challenging year,” he said. “One silver lining is that inflationary pressures do though seem to be easing, with input costs and output price inflation rising at their lowest rates in 21 months.
“With energy prices falling back, easing inflation, alongside less supply chain disruption, will be amongst the few positives during 2023."
Even the recruitment sector showed signs of easing in last month’s PMI, with 20 consecutive months of employment growth nearly coming to an end. Mr Ramsey said a shortage of skilled staff is likely to remain an issue in the months ahead.
“Ongoing difficulties recruiting suitable staff though remains a factor rather than falling demand alone,” he said. “That dynamic will likely continue into 2023, with firms continuing “to suffer from skills shortages, however falling demand will increasingly come to the fore.”
Meanwhile, the retail sector showed a surprise rebound last month, but the rise in sales is thought to be in contrast to months of decline and consumers “enjoying a last hurrah” ahead of Christmas. Retailers were fairly pessimistic about the prospects for the coming months in contrast to manufacturers which experienced a sharp decline in both output and orders in November but were confident for the months ahead.
