Business

Northern Ireland private sector weakens for seventh month in a row

Shoppers on Black Friday in Belfast. Retail was the only sector in Ulster Bank's PMI to report in increase in activity during November. Picture by Mal McCann.
Shoppers on Black Friday in Belfast. Retail was the only sector in Ulster Bank's PMI to report in increase in activity during November. Picture by Mal McCann. Shoppers on Black Friday in Belfast. Retail was the only sector in Ulster Bank's PMI to report in increase in activity during November. Picture by Mal McCann.

NEW orders and output were down in what was the seventh consecutive month of decline in private sector activity here.

That was the main reading from November’s PMI report produced for Ulster Bank by S&P Global.

All sectors with the exception of retail contracted over the month. Services suffered the worst decline (41.7) with construction (41.3) and manufacturing (44.7) not far behind. Any reading below 50 represents a decline.

While retail was the only sector in the survey to witness an incline (53.3), that growth “comes off the back of months of declines” said Chief Economist at Ulster Bank, Richard Ramsey.

He said: “It may seem surprising to see a rebound in retail activity, but the rise in sales is coming off the back of months of declines. There is also perhaps an element of consumers enjoying a last hurrah for Christmas ahead of a challenging 2023.

PMI survey for November shows private sector in a 'weakened' state
PMI survey for November shows private sector in a 'weakened' state PMI survey for November shows private sector in a 'weakened' state

“Indeed, when we look at the outlook, retailers are expecting their sales to be lower in 12 months.”

Employment growth was still positive but at its weakest in 21 months.

Mr Ramsey said that softening could be attributed more to a skills shortage than demand.

He added: “One key source of positivity has been the 20 consecutive months of employment growth but this almost ground to a halt in November largely due to falling staffing levels in services and manufacturing. Ongoing difficulties recruiting suitable staff though remains a factor rather than falling demand alone. That dynamic will likely continue into 2023, with firms continuing to suffer from skills shortages, however, falling demand will increasingly come to the fore.”

The overall PMI for the month sat at 46.0.

Positives from the report include a levelling off of delivery delays and input costs which both showed signs of easing, growing at their weakest pace in 21 months.

Looking ahead manufacturing was the only sector confident in growth in 12 months’ time.

“Manufacturers are optimistic about the outlook. This perhaps reflects the nature of the current recession with households and consumer-sensitive businesses likely to experience a longer and deeper downturn than global exporters,” explained Mr Ramsey.

The report said sentiment among other sectors remains negative with the impact of strong cost pressures and expectations of an economic downturn behind that pessimistic outlook.

The broader picture showed a global slowdown impacted exports, with firms in NI seeing new export orders falling sharply “albeit to a slightly lesser extent than what was recorded during October”.

Summing up the report, Mr Ramsey said: "Once again, all 12 UK regions witnessed a decline in private sector activity in November. Northern Ireland notched up its seventh successive monthly fall in output, albeit the pace of decline slowed.

“More concerning though was that the pace of contraction in new orders was more marked, with all four sectors experiencing weakening demand.

“Overall, the local private sector is coming to the end of 2022 in a weakened state, with 2023 likely to be a very challenging year. One silver lining is that inflationary pressures do though seem to be easing, with input costs and output price inflation rising at their lowest rates in 21 months. With energy prices falling back, easing inflation, alongside less supply chain disruption, will be amongst the few positives during 2023."