BUSINESS activity in Northern Ireland contracted for the sixth month running in October, according to a new report.
Ulster Bank’s latest purchasing managers index (PMI) showed the north’s private sector continuing to feel the strain from ongoing cost pressures.
The monthly survey, which is based on the experiences of 200 private sector businesses across construction, manufacturing, retail and services, signalled all four sectors stayed firmly in contraction mode in October.
Once again, the biggest contraction was recorded by the north’s construction sector.
The cost of living crisis, caution among customers and an associated drop in new orders were cited as the key factors in the latest fall in activity across the private sector.
It left business confidence here at its lowest point for 26 months.
October’s PMI showed activity and new orders continuing to decrease.
Ulster Bank’s chief economist, Richard Ramsey said outside of the Covid-19 pandemic, the decline in new orders recorded by the PMI during October represented the sharpest decline since January 2011.
Firms in the north also posted the biggest drop in incoming work of the 12 UK regions.
“Cost pressures and economic uncertainty were cited as key factors behind the fall in demand,” said the economist.
“Export orders remain particularly weak with the latest monthly decline the forty-fifth in-a-row.”
Although the outlook is increasingly gloomy for economy, private sector firms here appear to be still recruiting.
“Despite falling demand, all four sectors – manufacturing, services, retail and construction - increased their staffing levels in October,” said Mr Ramsey.
But he said the feedback from businesses suggest the pick-up in hiring is linked to long-standing recruitment difficulties and rebuilding workforces following the pandemic.
"The sources of inflationary pressures remain broad-based encompassing wages, raw materials, energy and shipping costs,” continued the economist.
“Output price inflation remained elevated but well down on the record rates posted earlier in the year. Indeed, firms raised the prices of their goods and services at their weakest rate in 19 months.
"Given the evolving ‘cost of everything’ crisis it is not surprising that business confidence sank to a 26-month low.
“All four sectors anticipate lower levels of activity in 12 months’ time. Sentiment is not likely to improve anytime soon with this week’s Autumn Statement expected to yield more fiscal pain rather than comfort."