Northern Ireland

PMI: Northern Ireland economy surged in February prior to Russian invasion of Ukraine

The north's economy recorded a surge in activity in February, a new survey shows. But the economic outlook has changed drastically following Russia’s invasion of Ukraine. AP Photo/Efrem Lukatsky
The north's economy recorded a surge in activity in February, a new survey shows. But the economic outlook has changed drastically following Russia’s invasion of Ukraine. AP Photo/Efrem Lukatsky The north's economy recorded a surge in activity in February, a new survey shows. But the economic outlook has changed drastically following Russia’s invasion of Ukraine. AP Photo/Efrem Lukatsky

A MARKED improvement in the north’s economy last month could be short-lived in the wake of Russia’s invasion of Ukraine, a new report from Ulster Bank suggests.

The latest purchasing managers index (PMI) from the lender showed a surge in business activity during February, with new orders increasing at the sharpest rate in seven-and-a-half years.

The monthly survey, which reflects the experiences of 200 private sector firms across the north’s manufacturing, services, retail and construction sectors, is considered a reliable early indicator of how the economy is performing.

It showed February was the first month since June 2021 that all four sectors recorded growth.

But the subsequent impact of Russia’s actions at the end of February has radically shifted the economic outlook.

Ulster Bank’s chief economist, Richard Ramsey said: “Commodity prices have rocketed, and an unprecedented array of sanctions have been imposed on Russia.

“Businesses therefore face a new source of supply chain disruption.

“Clearly the primary concern is with the people of Ukraine and the severe situation they face,” said the economist.

“But businesses and households here in Northern Ireland are also set to be impacted by the situation too, most particularly through the rampant inflation in energy and food prices, as well as the general uncertainty.”

February’s PMI also revealed that private sector employers are struggling to source skilled staff, with the rate of job creation grinding to its slowest rate in the past 12 months.

It left Northern Ireland posting the slowest rate of job creation of the 12 UK regions assessed.

“Clearly firms are struggling with skills shortages and are finding it difficult to get suitable candidates to help meet the demand,” said Mr Ramsey.

Against the backdrop of the strong growth in new orders, the staff shortages coupled with ongoing supply chain disruption meant backlogs increased at the sharpest pace in eight months.

There were some signs that the rate of inflation had eased prior to the Russian invasion. But the drastic rise in fuel and energy costs looks set to wipe that out.