THE north’s private sector remained in contraction mode during November, but there were signs the pace of decline is easing.
The latest purchasing managers’ index (PMI) from Ulster Bank showed business activity continued to fall last month, with further reductions in output and new orders.
It marked the fifth consecutive month of the north’s private sector contracting.
But the latest survey suggests the rate of decline may be slowing down.
Based on the experiences of 200 businesses across the north’s construction, manufacturing, retail and services sectors, the monthly PMI is considered a trusted litmus test for the performance of the economy here.
The survey was conducted last month as the Office of National Statistics (ONS) revealed UK inflation eased to 4.7%.
And there were some signs in the data that the north’s economy could similarly be on the recovery track.
Rates of contraction eased from October and business confidence picked up.
That was largely down to the recovery in the all-important services sector.
Services, which accounts for around 55% of all businesses in the north, bucked the wider trend in November, showing signs of growth.
Yet there was more bad news for Northern Ireland’s construction sector, which once again stood out as the worst private sector performer.
The PMI reflected the latest official data published by the Northern Ireland Statistics and Research Agency (Nisra), which exposed a significant slowdown in house building during 2023.
The number of new houses started in the first nine months of this year was 21.7% down on the same period last year and 25.5% below the same period in 2019.
The 3,889 dwellings completed in the past three quarters, was 22.5% down on last year and 1,573 (29%) down on 2019.
Across the private sector, November’s PMI showed export demand weakening further, with orders falling for the seventh consecutive month, and at a faster pace than in October.
Despite the headline indicators remaining negative, Ulster Bank’s chief economist Richard Ramsey said there was evidence that the pace of decline is slowing down, something which was reflected in other regions of the UK last month.
“The services sector recorded its first increase in business activity in five months,” he said.
“Both services firms and retailers posted a modest pick-up in new orders last month while the construction industry experienced another sharp fall in new business.”
However, the economist said conditions in the labour market remain tight, with firms reporting increased wage costs.
Employers also reported struggles in filling vacancies with suitable candidates.
“Nevertheless, the pace of hiring quickened in November due to services firms with construction and retail also adding to their headcount,” the economist continued.
“Manufacturing was the exception, reducing employment for the first time in 11 months.”
Looking ahead, optimism among local firms improved across all four sectors with overall confidence hitting a four-month high.
“Services and manufacturing are the most confident about business activity in 12-months’ time,” said Mr Ramsey.
“Sentiment amongst services firms hit a 22-month high.
“Given the ongoing cost-of-living squeeze and rising mortgage costs it is perhaps not surprising that retailers remain relatively subdued about prospects for the year ahead.
“Meanwhile the construction sector, which has reported falling orders for the last twenty-nine months, expects business activity to be flat (at very low levels) by November next year,” he added.
“Given the slowdown in housebuilding coupled with the dire outlook for the public finances in the short-to medium term, this is perhaps not surprising."
Meanwhile, a separate study published on Monday by PwC, showed the number of ‘green jobs’ advertised in the north has continued to grow, albeit at a slow pace.
PwC UK’s latest ‘green jobs barometer’ showed that in Northern Ireland, green jobs as a proportion of all job adverts increased from 1.9% in 2022 to 2.4%, and is now higher than the UK average of 2.3%.
Jason Calvert, director at PwC Northern Ireland, said: “It’s encouraging to see green job creation in Northern Ireland showing resilience.
“The focus now needs to be on creating solutions for businesses in Northern Ireland to help ensure that our economy can capitalise on the opportunities of the net zero transition.”