The latest report from the monthly Ulster Bank purchasing managers’ index (PMI) has painted a rather gloomy picture of the private business sector in Northern Ireland. Business activity has fallen for the 4th month in a row, with new orders further declining and the rate of job creation also slowing down.
This has led to an alarming drop in confidence among the NI business community. They believe that the continuing high interest rates, along with no clear leadership (as the Executive are still not sitting in Stormont) are having a profound effect on the economy.
All Business Sectors Have Posted A Decline
Speaking about this latest report, Ulster Bank chief economist Richard Ramsey is quoted in an article on the Belfast Telegraph website as saying:
“Northern Ireland’s private sector started the final quarter of the year with a further loss in momentum.
“Business activity fell for the fourth successive month, with all sectors posting a decline. It was a similar story regarding order books, which recorded their fifth consecutive month of contraction.”
He went on to say that:
“The higher interest rate environment and the ongoing political stalemate at Stormont were cited by businesses as key reasons behind their challenges.
“Nevertheless, Northern Ireland’s private sector once again increased staffing levels, albeit at the slowest rate in 10 months.
“Looking ahead, we have the Chancellor’s autumn statement on November 22. However, expectations that he will provide a fiscal boost to businesses or households are extremely low.”
Higher Interest Rates And Stormont Stalemate Having A Negative Impact
And in the same article another spokesman for the Ulster Bank said:
“Output decreased across all four monitored sectors. Panellists reported that higher interest rates and a lack of government at Stormont had impacted negatively on both business activity and new orders in October. New orders decreased solidly, and to the greatest extent since January.”
The fall in demand for goods and services has led to many companies keeping their price rises to the bare minimum, with some companies in the manufacturing and retail sectors reducing prices. Building firms were particularly pessimistic about what the future held for them, many of them conceding that they were expecting to still be mired in a recession 12 months on from now.
This latest report does not make for good reading with very little to be encouraged about. The hope is that, when eventually interest rates begin to decrease rather than increase, and if and when the Executive at Stormont gets round the table again, that business conditions begin to improve. But we could be waiting for any good news for quite a while yet.