Retailers and manufacturers endure cost spikes in February says PMI report
BUSINESS costs are spiralling at a record level, with retailers and manufacturers in the north taking the hit, according to the Ulster Bank's latest Purchasing Managers' Index (PMI).
And while business activity continued to expand in February, it was the second month in a row in which growth eased, the findings revealed.
The closely-watched bellwether of regional economic trends said that both new orders and employment rose at sharper rates in February, with growth of each broadly in line with the UK average. Meanwhile, inflation of both input costs and output prices remained elevated.
Ulster Bank's chief economist Richard Ramsey said: “Whilst Northern Ireland business activity continued to expand in February, it was the second month in a row in which growth eased, following a trend in the wider UK economy.
"On the positive side, both new orders and employment growth quickened, with the rate of job creation hitting a five-month high.
"All four segments of the private sector also recorded increases in both output and employment, with construction returning to expansion after 10 months of contraction, and retail - the fastest growing sector - continuing to experience buoyant demand."
But he cautioned: "Significant inflationary pressures continue to be a key theme however,, with price rises evident across all sectors.
"The manufacturing sector saw the most marked increase in its cost-base, with input prices rising at their fastest rate on record.
"Where possible, manufacturers seem to be passing these increased costs onto their customers, evident in a record rise in output prices. Escalating prices are also apparent in the retail sector, with input price inflation at a high of almost eight-and-a-half years, and the prices that retailers charge to consumers are now rising at their fastest rate since the survey began around 14 years ago.
"This is driven by the weak sterling, the flip side of which is a continuing strong export performance, which is driving growth in manufacturing and cross-border retail."
He added: "The challenge in the months ahead will be to maintain growth in the face of such strong inflationary pressures, alongside no shortage of political challenges.
"The danger is that the economy takes a back seat as politicians grapple with triggering Article 50 in the UK and re-establishing political stability in Northern Ireland.”