The latest Ulster Bank NI purchasing managers’ index has shown that business activity in Northern Ireland has decreased for the second consecutive month in a row, however there does seem to be enough positives to believe that better times may not be that far away.
The factors behind this further reduction in business activity appear to be the high interest rates that are still prevailing and the cost of living crisis, which are affecting demand for goods and services. The continuing lack of a functioning Executive in Stormont cannot be helping matters either, but the rate of inflation does seem to be reducing and many companies are continuing to take on more staff.
Private Sector Performance Taking A Turn For The Worse
Here is what Richard Ramsey, chief economist at Ulster Bank in Northern Ireland, had to say about the economic situation here in an article in the Belfast Telegraph. He said:
“Like the weather, private sector performance in most of the UK regions took a turn for the worse during August.
“Only two UK regions recorded growth in output last month. Northern Ireland is at the bottom of the list, with the sharpest rates of decline seen across the UK.”
Employment Growth And Normalisation Of Supply Chains Are Positives To Hold On To
He went on to say that:
“There were some positive aspects of the Northern Ireland survey, including the UK’s fastest rate of employment growth, and the ongoing normalisation of supply chains, with faster delivery times benefiting local firms.
“In addition, despite ongoing challenges, firms outside of the construction industry are expecting a pick-up in activity in 12 months’ time, meaning that sentiment continues to be relatively healthy.
“However, these positives are outweighed by a weakening in demand and a pick-up in inflationary pressures.
“Business activity in Northern Ireland fell for the second month running, with output recording its fastest rate of decline in seven months and all four sectors posting a decline in August.”
And finally he said that:
“Inflationary pressures had been easing over the past 12 months or so, but faster rates of input cost inflation, which respondents attributed to higher wages, and output price inflation were reported in the latest survey.
“This is still well below the elevated inflation rates seen during the past three years, but is perhaps a warning to businesses that they can’t be complacent about cost pressures.
“This survey relates to the deteriorating conditions in the private sector. The challenges we are seeing in the public sector at a national level, not least the emerging signs of years of underinvestment, are worrying.
“This is also a feature in Northern Ireland, but addressing these challenges is complicated by the ongoing absence of an Executive and the mounting fiscal challenges this is creating.”
So sentiment continues to be healthy but confidence can be a fragile thing. The sooner we see some real economic progress the better for the business community and the population of Northern Ireland as a whole.