PMI: Inflationary pressures intensifying for Northern Ireland private sector
INFLATIONARY pressures for businesses in the north are intensifying, with energy hikes and supply problems set to compound problems this winter.
That’s according to the latest purchasing managers index (PMI) from Ulster Bank.
Considered one of the most reliable early indicators for the direction of the Northern Ireland economy, September’s business survey revealed the slight easement in inflation reported during August, proved to be the exception to the recent trend.
The PMI showed input prices for the private sector reaccelerated at the strongest rate since the monthly survey began in 2002.
Compiled by IHS Markit for Ulster Bank, the report is based on the experiences of 200 private businesses from across the north’s manufacturing, construction, retail and services sectors.
The survey showed that selling prices among businesses also surged to a new record high last month, as companies continued to pass on their sharply rising costs.
Ulster Bank’s chief economist Richard Ramsey said the situation is set to get worse before it gets better, with the latest survey coming before the more recent energy price shock facing the economy.
He listed price inflation as one of three major issues facing the north’s economy this winter alongside a fall in new orders and supply chain problems.
According to September’s survey, private sector firms reported the first fall in new orders for six months.
“Thirdly,” continued the economist: “Supply chains remain under stress, with supplier delivery times lengthening significantly in September relative to August.
“This is most acute within retail, and this will present challenges for consumers and business, particularly as we approach Christmas.”
The latest PMI showed that while business activity continued to grow during September, it was an increasingly mixed picture by sector.
Manufacturing proved the strongest performer last month, with employment rising at the second-fastest rate on record for the sector.
The north’s service sector also saw activity rise sharply.
But both retail and construction suffered falls in new orders and employment, with retail taking a particular hit.
Mr Ramsey said both the construction and retail sectors remain pessimistic about output a year ahead.
Despite the pricing issues and potential problems around supply chains, the Northern Ireland private sector on the whole appeared on a more positive footing last month, with business sentiment climbing to a three month high.
The PMI noted that the optimism appeared mainly driven by hopes of improved business volumes as Covid-19 restrictions are eased further.