Signs of 'slowdown' in north's private sector as inflationary pressures increase
BUSINESS activity within the private sector continues to increase, but new orders and employment both fell to seven-month lows in February according to the latest PMI report.
Ulster Bank Northern Ireland PMI for February shows that the private sector remains comfortably inside growth territory, but the rates of expansion in output, new orders and employment all eased over the month, while inflationary pressures intensified.
Northern Ireland companies again recorded a faster increase than the UK as a whole in terms of output, linked to higher new business and improving client demand. All four sectors saw activity expand, led by retail. New product launches and marketing activities helped firms to secure new business in February, extending the current sequence of growth to 16 months. That said, the rate of expansion was the slowest since July last year.
Rising new business fed through to a further accumulation of backlogs of work, but this was the weakest in seven months, while the rate of jobs growth also slowed in February.
Against the modest growth, input prices rose at the fastest pace in nine months amid reports of higher costs for fuel, raw materials and staff.
Retailers posted the sharpest increase in cost burdens, followed by manufacturing firms. Retail also saw the sharpest rise in output prices of the four monitored sectors. Overall, charges increased at a sharp pace that was the steepest since March last year. Business confidence remains positive however, with 31 per cent of panellists predicting a rise in output over the coming year, albeit sentiment eased to a seven-month low.
Ulster Bank chief economist Richard Ramsey said that while the numbers suggest that the local private sector continued to grow in February, there were clear indications of a "slowdown".
"With the prospect of trade wars between Europe and the US, alongside the uncertainty about a range of political issues, this is perhaps to be expected. Indeed it would be unsurprising if this trend of easing back further from the multi-year highs at the start of the year continued in the months ahead.”