Activity in the Northern Ireland economy contracted for the fourth consecutive month in August as demand tapered in reaction to soaring inflation, according to the latest PMI report from Ulster Bank.
In the latest hint at the toll “intense price pressures” are having on businesses, the PMI, which surveys private sector businesses throughout the province, revealed a pessimistic outlook for the year ahead and indications that the tight labour market is also easing. Employment continued to grow last month and companies still reported difficulties finding staff, but the growth was recorded at the weakest pace of 18 months.
Unsurprisingly, retailers were hardest hit with the sector posting the biggest fall in demand and the only sector not to increase staffing levels in August. Offering some succour for them and other business was the fact the rate of price rises had eased slightly, although it remained “stronger than anything reported prior to May 2021”.
Manufacturing proved one of the bright spots in the report as the only sector to report a - marginal - increase in business activity. It, and other sectors, have been helped by the fact waning demand has helped eased clogged supply chains.
Nevertheless, there was little positivity to report from August’s PMI report,” Ulster Bank’s chief economist Richard Ramsey said.
“We are in the midst of a cost-of-living and cost-of-doing-business emergency with rising energy costs the primary driver behind the squeeze on disposable incomes and profitability,” he said. “Last week, the UK government announced a range of measures to mitigate against the worst effects of the surge in energy costs and we wait to see and hear how similar measures will be applied to Northern Ireland. The clock is ticking.”
