A report by the Ulster Bank has shown that, whilst business activity in July had increased, the rate of expansion had slowed down compared to June`s levels. This is perhaps understandable as there was a splurge of activity as many of the major lockdown restrictions eased in June, leading to a rise in optimism and spending. This has now slowed down quite considerably according to the latest indexes.
Something else to take note of was that prices increased for the 5th consecutive month, leading to speculation that inflation could be an issue in the coming months.
Moderation In The Rate Of Expansion Expected
Speaking about the report, Ulster Bank chief economist Richard Ramsey is quoted in the Belfast Telegraph, saying:
“Northern Ireland’s private sector started the third quarter with its fourth successive month of output growth.
“However, the pace of growth eased in July in common with nine other UK regions. A moderation in the rate of expansion was expected following the boost to activity in earlier months that followed an easing of lockdown restrictions.
“Nevertheless, Northern Ireland firms posted the slowest rate of output and new orders growth in July amongst the 12 UK regions.”
“Meanwhile inflationary pressures continued to intensify with local firms reporting a record rise in input costs for the fifth successive month.
“Manufacturing, construction and retail are all experiencing extreme input cost inflation with PMI readings of over 90.”
Supply Chain Disruption
And speaking about supply chain disruption he said:
“Bureaucracy related to Brexit was the most frequently cited reason for a further lengthening in delivery times.
“In some respects, there is a three-speed recovery happening, with manufacturing and services continuing to record robust rates of growth in output and new orders.
“Retailers however, recorded slower rates of growth across these measures whilst the construction industry has seen its performance go into reverse.”
Difficulties Within The Construction Industry
And on the contraction of the construction industry he said:
“These difficulties within construction are linked to severe cost increases and supply-chain difficulties which have triggered a slump in confidence within the sector.
“Both construction and retail expect activity to be lower in 12 months’ time.
“However, services and manufacturing firms remain optimistic and expect strong growth in the year ahead.”
There are certainly obstacles ahead in the economic recovery process, but we are sure that these hurdles can be overcome and we can all look forward to a more prosperous future.