11 December 2014

Northern Ireland PMI - mixed picture of local business conditions

The latest Ulster Bank Northern Ireland PMI® report – produced for Ulster Bank by Markit – reports that last month showed further signs of a loss of growth momentum in the Northern Ireland private sector as output, new orders and employment all rose at weaker rates. Meanwhile, the rate of input cost inflation continued to ease, contributing to a third successive monthly reduction in output prices.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: 

"The latest Ulster PMI survey presents a somewhat mixed picture of local business conditions. Whilst Northern Ireland’s private sector recovery extended to 17 months in November the overall theme is one of an economic slowdown. Local firms reported slower rates of growth in output, orders and employment in November. Furthermore, last month represented the weakest rate of growth in both business output and new orders since the recovery began in mid-2013. 

"Northern Ireland’s slowdown is also more marked than the rest of the UK. Unlike Northern Ireland, the UK reported an acceleration in the rates of growth in business activity, new business and employment last month. Indeed, the differential between the local and national (UK) private sector growth rates is at its widest since the local private sector recovery began in mid-2013. It is noted that Northern Ireland’s firms also posted the weakest rates of output and employment growth of all the UK regions in November. 

"At a sector level, the slowdown has been particularly marked within the construction and manufacturing sectors. Meanwhile the retail industry posted its third successive month of contraction. Local manufacturers signalled their weakest rates of growth in business activity and new orders since mid-2013 with local firms barely adding to their staffing levels in November. Manufacturing is the most export intensive sector and is therefore more exposed to the economic conditions in external markets. Clearly the ongoing economic difficulties in the Eurozone are having an impact on the order books of local firms. Last month saw Northern Ireland’s private sector firms report their first decline in export orders in 17 months. 

"While demand appears to be waning for manufacturing goods, local manufacturing firms are benefiting from reduced input cost inflation stemming from sterling’s strength and the sharp fall in the oil price. Manufacturing input cost inflation is rising at its weakest rate since June 2009. Local firms are responding to this by lowering their prices at the fastest rate since August 2012. 

"The services industry was the one sector which bucked this wider trend of a slowdown. Northern Ireland’s services firms reported a pick up in business activity, new orders and increased their staffing levels last month relative to October. However, the rates of growth across this range of indicators remain below the long-term average growth rates that prevailed before the downturn. 

"Overall, it is encouraging that Northern Ireland's recovery continues. However, as we enter 2015 there is perhaps not as much momentum as we would like, particularly given the challenging public expenditure environment that lies ahead." 

Access the full report on the link below.