THE north was the only UK region to record private sector growth last month, but business confidence plummeted, according to the latest PMI data.
The Ulster Bank Northern Ireland PMI (Purchasing Managers' Index) report for October has revealed a slight pick-up in growth, with both output and new orders rising quicker in September.
The manufacturing and service sectors both recorded increases in output last month, but declines were recorded in construction and retail activity. Construction saw activity fall for the first time in 15-months and at the sharpest rate in almost two years.
Overall growth remains subdued according to the survey, but business confidence for the year ahead has fallen dramatically.
The retail, construction and services sectors are now the least optimistic they have been at any time in the past 20-months, when the indicator started to be tracked, with political uncertainty and Brexit cited as the key reasons for the shift in opinion.
Input costs, such as transport, electricity and fuel continued to rise sharply in October according to the survey, with the rate of inflation stronger than the September figure. This has in turn led to higher output prices, with the latest rise the most pronounced in four months and above the UK average.
In response to new orders extra staff were hired in October, according to the survey, which helped contribute to a reduction in backlogs of work.
Richard Ramsey, chief economist at Ulster Bank said the mounting pessimism in the latest survey largely relates to the construction sector.
"Unlike their counterparts in the UK, Northern Ireland construction businesses are also seeing their order books shrink - at the fastest rate in 22-months - and this is leading to a decline in optimism. The lack of decision-making in government in Northern Ireland and the resulting logjam in capital projects is now being acutely felt by many construction businesses," Mr Ramsey said.
“More positively, the manufacturing sector continues to experience strong demand, despite a slowdown in export orders. Unsurprisingly therefore, manufacturers remain the most optimistic about the year ahead. Clearly, the big factor that will determine whether this optimism is realised is how Brexit pans out. The outcome of the negotiations will determine the trajectory of private sector growth in Northern Ireland into the foreseeable future, particularly in the export-focused manufacturing sector," he added.
