Businesses in Northern Ireland grew again last month, weathering pressures from rising interest rates and jitters around the wider economy, according to the latest PMI report from Ulster Bank.
Activity grew for the fifth consecutive month in June with the most prominent gains recorded in the manufacturing and services sectors, although both construction and retail recorded a slight drop off in activity.
The performance has confirmed recent evidence that businesses in the province have put in a solid performance despite an array of headlines, not least the fact Northern Ireland’s government remains at a standoff.
Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said the lack of political leadership is proving difficult for some sectors, however.
"It is not coincidental that the sectors most exposed to the lack of a NI Executive and the cost-of-living crisis – construction and retail respectively – are the ones that are the least optimistic. Construction firms in particular will be hoping we see a return to Stormont in the second half of this year, but there is no real prospect of the cost-of-living crisis dissipating in the remainder of 2023.
He said a strong interest rate environment is also hampering growth.
“Higher interest rates are also increasingly weighing on both business and consumer sentiment and this feature is expected to be with us for the foreseeable future too," he said.
However, there are increasing signs that the inflationary pressures which have prompted interest rate rise are beginning to ease.
“It was encouraging to note that inflationary pressures continued to ease with input costs and output prices rising at the slowest pace in 33 and 32 months respectively. Where input costs did rise, it was linked to wage pressures.
“Meanwhile, manufacturing saw its input costs fall for the first time in over three years. The easing in inflationary pressures is being accompanied by another welcome development - a marked shortening in supplier delivery times, most noticeably within retail.”
