Business

Business activity growth eases in the north as UK accelerates ahead

New orders in manufacturing rose to its high level in over three years last month
New orders in manufacturing rose to its high level in over three years last month New orders in manufacturing rose to its high level in over three years last month

BUSINESS activity growth eased in Northern Ireland last month against the backdrop of an overall UK acceleration.

The Ulster Bank PMI report for October shows that the private sector inn the north remains in positive territory, with business activity increasing in each of the last 13 months. The latest expansion though was the slowest since July and weaker than the UK average.

New orders grew strongly in the north last month, but growth eased from September's nine-month high. The strong performance, believed to be influenced by investment in advertising and sterling weakness, was further driven by the manufacturing and construction sectors, with the former reporting its highest level of new orders in over three years. There was also a marked acceleration in the number of retail orders, with the sector remaining the fastest growing for the second month in succession. By contrast manufacturing growth slowed to a three-month low, while the overall rate of new export orders fell to a rate not seen in 14 months.

With workloads continuing to grow companies raised their staffing levels for the thirty-third successive month. The rate of job creation was solid, despite easing from that seen in September, while for the first time since June, all four sectors saw employment increase. Rising costs continue to weigh heavily on local businesses, with the rate of input cost inflation remaining sharp in October , particularly in the construction and retail sectors and prices again increasing as a result of sterling weakness.

Higher commodity and fuel costs are also referenced as factors in increased input costs, which have been passed on to clients, as firms increased their prices for the 24th month in a row

Looking ahead companies continue to predict growth of output over the coming 12 months, although sentiment eased to a three-month low.

Chief economist for Ulster Bank, Richard Ramsey said the north's private sector was performing admirably despite the "ongoing inflationary pressures".

"Northern Ireland mirrored the Republic of Ireland in the sense that the rate of business activity growth eased. This was in contrast to the UK picture where there was an acceleration in activity across most regions. As a result, Northern Ireland has slipped down the business activity growth table, with only Scotland now reporting a weaker rate of growth."

“Cost pressures remain the key challenge, with headline inflation remaining elevated largely due to rising commodity and fuel prices. As a result, firms continued to increase their prices for the 24th month in a row, which will continue to hit consumers’ pockets in the months ahead. In this environment, some caution is being displayed by consumer-facing firms. Retail has been a key driver of employment growth over the past few years. However, the latest survey indicates that the pace of job-creation within the sector is now sluggish. Despite no shortage of challenges, particularly on the political front, local firms remain optimistic about the year ahead; albeit slightly less so than they were in September.”