The latest report by the purchasing managers index, from the Ulster Bank, has shown that there was a slight rise in business activity at the end of last year. However this rise was most likely down to a completion of outstanding business, rather than a burst of new business activity, so it would be wrong to get too excited about these new figures.
Northern Ireland’s figures for December were actually only beaten by London of the 12 UK regions, with manufacturing, retail and services all seeing a modest improvement. But construction continued its downward trend with a decrease in activity once again.
Growth In Private Sector For First Time In 6 Months
Richard Ramsey, chief economist for Ulster Bank in Northern Ireland, speaking about the report in an article in the Belfast Telegraph, said:
“Northern Ireland’s private sector returned to growth for the first time in six months in December.
“Retail and manufacturing joined services in expansion mode. Retailers saw a sharp rise in sales following seven successive months of decline.
“Manufacturers and services companies recorded more modest rates of growth while construction remains mired in recession. Construction output has fallen almost continuously over the last two-and-a-half years while new construction orders have been falling almost continuously for three years.”
New Demand Remains Weak
He went on to say that, although demand remains weak there is some quiet confidence within the private business community:
“New demand remains weak with order books shrinking for the seventh month running,” he said.
“Retail was the only one of the four sectors to record a pick-up in demand last month. Despite subdued demand, Northern Ireland’s private sector continued to increase staffing levels, albeit at its slowest pace in twelve months. Recruiting staff continues to present difficulties for firms.
“Manufacturers reduced their headcount for the second month running with December’s decline the sharpest in almost three years. This suggests some manufacturing firms are adjusting their business conditions to the reduced external demand.
“Inflationary pressures ended 2023 significantly below where they started the year. But there are signs of costs pressures ticking up again not least in terms of shipping costs with container ships being re-routed away from the Red Sea and the Suez Canal. Supply-chain disruption could once again be a feature of the global economy in the year ahead. Higher wages were widely cited as a cost pressure in the latest survey while some firms mentioned increased material costs. Outside of construction, Northern Ireland’s private sector remains confident for growth in 2024. But concerns about the lack of government at Stormont remain.”