NORTHERN Ireland privately-run businesses, including many small firms, have enjoyed "near record" levels of export in the wake of the Brexit vote outcome as the sector returned to growth last month, according to Ulster Bank.
But with inflationary pressures set to intensify in the new year, it will lead to higher prices, which will ultimately impact on consumer spending and put the brakes on growth.
The figures - a veritably mixed bag - are contained in the bank's latest months PMI report, a closely-watched bellwether of now businesses in the north performed in October.
The data signalled that business activity returned to growth, although the rate of expansion was modest as total new orders were largely unchanged in spite of a substantial increase in exports.
Export orders were supported by the weakness of sterling, but this also had the effect of pushing up input costs which rose substantially.
Ulster Bank's northern region chief economist Richard Ramsey insists the figures give mixed messages.
He said: “Following stagnation in September, Northern Ireland’s private sector returned to growth last month, albeit rather sluggishly and weaker than all other UK regions bar one.
“Private sector firms increased their staffing levels for the 21st month in a row, though the rate at job creation eased and was below the UK average for the first time in 10 months.
“But perhaps the most significant aspect of the latest survey concerned new orders, and the contrasting performance of the domestic and export markets.
"Overall, incoming orders stagnated in October and have failed to grow since June. But export orders expanded at their second highest rate since the survey began. This implies that domestic orders have been contracting at a significant rate."
But the opposite seems to be the case within the north's construction sector, the report suggests.
Mr Ramsey adds: "Given Belfast’s crane cluttered skyline, it would appear that business conditions within the local construction market are relatively buoyant.
"However, despite this, and perhaps surprisingly, the PMI points rapid rates of contraction in construction output orders and employment.
"This is largely due to subdued demand within a major external market – Great Britain."
The latest PMI also says the EU referendum vote has proved to be a mixed blessing for Northern Ireland firms.
Says Ramsey: "On the one hand, sterling’s weakness against the euro has boosted export price competitiveness.
"Meanwhile some survey respondents attribute increased uncertainty following the vote as negatively affecting orders.
“A weak pound may be positive for exporters but it is bad news for importers. Input cost inflation accelerated last month to its highest rate since May 2011.
"Manufacturers and retailers are bearing the brunt of the input cost inflation, with the former posting the fastest rise in input costs since July 2008.
“Overall, it is encouraging that the private sector remains in growth mode. What is concerning though is that the rate of employment and output growth remains relatively weak.
"Furthermore, the largest contributor to growth remains the retail sector, but given that inflation pressures are intensifying, these will increasingly come to the fore in 2017 with rising consumer prices.
"This will impact on consumer spending and ultimately act as a major brake on growth.”
