BUSINESS activity picked up in the north last month, but inflationary pressures have now risen to a six-month high according to the latest PMI report.
The Ulster Bank PMI figures show solid increases in business output and new orders, with the rates of expansion in both slightly quicker than those recorded in October. Further good news was seen in rising workloads, which in turn led to a further accumulation of outstanding business, with companies increasing staffing levels for the 34th month running and faster than the UK average.
The construction industry appears in rude health with output accelerating to a 28-month high and employment levels growing at the fastest rate since the survey began. Orders have also expanded for a third month, albeit at a slower rate.
Retail remains the fastest growing sector for a third month in a row, with sales rising last month at the fastest rate this year.
Manufacturing experienced a more difficult November as employment growth fell for the fourth time in five months.
Overall input cost inflation accelerated to a six-month high in November putting increased pressures on firms in the north. As a results prices rose for a 25th consecutive month, with the service sector increasing levels at the fastest rate in over nine years (September 2008).
Ulster chief economist Richard Ramsey said 2017 has witnessed a "surge" in inflationary pressures.
"Input cost inflation hit a six-month high in November with retailers experiencing an 80-month high. 2017’s cost pressures are the most intense that businesses have faced in six years. Pressures on margins have meant the prices charged for goods and services have been increased significantly. Output price inflation in 2017 has been the most marked in the last 15 years."
Overall Mr Ramsey said despite Northern Ireland’s political situation and ongoing uncertainty linked to Brexit, business conditions remain encouraging.
“With just one month remaining, it is clear that 2017 has been a very good year for Northern Ireland’s private sector. The rates of growth in output, new orders and employment are all higher in 2017 than the previous year and represented the fastest rates of growth in three years."
"Overall, the Northern Ireland private sector moves into 2018 with considerable momentum, but there is also no shortage of challenges ahead; not least inflation, which will increasingly squeeze consumers; the local political deficit; and the ongoing Brexit negotiations, the more challenging phase of which lies ahead. The next 12 months will be both an interesting and critical time for the Northern Ireland economy," he added.
