The latest report from the Ulster Bank suggests that growing inflationary pressures are holding back the pace of economic recovery in Northern Ireland. However companies do seem to still be taking on new staff at a rapid rate which is very encouraging to see.
The Economy Is Showing Marginal Increases
The latest Purchasing Managers Index report from the bank shows that the economy is still increasing month on month, but only very marginally now, as input and output costs soar ahead and wage expenses rise also.
Last months Office for National Statistics figures showed that consumer price inflation was up 4.5%, a significant rise and one which will be causing concern. This combined with supply chain issues will be without doubt holding back a stronger recovery after Covid-19.
Energy Costs Are Having A Significant Impact
Talking about these findings in Business Live, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said that:
“The rate of growth in business activity slowed during October while input cost inflation rose at a record rate,” he said. “This isn’t surprising given the incoming news flow regarding energy costs and firms are passing these costs onto their customers by raising the prices of their goods and services at a record rate.
“Perhaps the most telling indicator is new orders which shows that incoming business fell for the second month running with all sectors bar manufacturing posting a fall in new orders. Construction saw the steepest decline, with firms citing price increases as a factor putting off customers.”
He went on to say that:
“Firms reported one of the fastest increases in headcount in the survey’s history. Manufacturing led the way in this, with firms in the sector posting the fastest rate of job creation on record. They are recruiting at pace to increase their capacity to deal with a buoyant order book and mounting backlogs.
“Survey respondents’ expectations for activity in 12 months’ time slipped to a nine-month low. Whilst manufacturing, retail and services firms still expect growth, construction businesses expect activity to fall. The latest survey’s theme of slower growth, higher inflation and supply chain disruption are expected to continue in the run-up to Christmas.”
There is no doubt that the economy in Northern Ireland is in a much healthier position than 12 months ago, but there are still issues to be resolved around costs and Brexit legislation etc which need to be worked through. The sooner we achieve this the better for all concerned and we can really look forward to a much brighter future.