The latest survey of businesses in Northern Ireland by the Ulster Bank has shown that record inflation has meant that demand is falling across all sectors of the economy, with retail taking a particularly large hit. But one right spot appears to be that unemployment is staying very low, with companies still looking to recruit further.
Big Drop In Business Activity In The Month Of July
There has been a big drop in business activity in the month of July, the biggest fall since February of last year, with output and new orders showing a reduction. In fact, if you take Covid and the effects of lockdown out of the equation, this latest drop has been the sharpest contraction since back in November of 2012.
Talking about this sharp fall in business activity in an article on the BBC News website, Richard Ramsey, Ulster Bank’s chief economist in Northern Ireland, said:
“Perhaps unsurprisingly, given the cost-of-living crisis, retail recorded the steepest declines in sales and orders.
“Retail sales have plunged over the last three months and retailers expect sales to be broadly unchanged in 12 months’ time.”
Employment Continues To Provide A Bright Spot Amid The Gloom
The only positive in the survey was that firms were still taking on more staff.
Mr Ramsey added: “Employment continues to be a bright spot with all four sectors increasing their staffing levels in July.
“But with the Bank of England forecasting a UK recession, a softening in the labour market will be expected going into 2023.
“That said, the labour market is likely to be much more robust this time than in previous recessions.”
When inflation is hitting double figures, and all forecasts seem to indicate that it is going to go higher in the next few months, this was always going to have a big impact on demand for products and services, and so it is proving. Wages are increasing at a far slower rate than inflation and this is impacting on consumers ability to spend. Our retail shops are feeling this, with dramatic falls in sales in some instances. There are likely to be some very tough times ahead for many businesses on our high streets who will have to be very astute so as to survive and thrive in future times. Business rates may have to be looked at again and reduced to provide some much needed relief, so that overheads can be cut in these difficult days.