Sat 6th Jul 2013
Ulster Bank PMI Northern Ireland
The latest Ulster Bank Northern Ireland PMI Report is attached for information alongside the powerpoint slide pack (2nd attachment). The latter highlights global, national, regional and Irish sectoral trends using the various Markit Economics PMIs.
October data from Ulster Bank showed business activity in the Northern Ireland private sector economy decreasing at the slowest rate since March. Falling new orders contributed to another decline in backlogs of work, although rates of contraction moderated in both cases. Meanwhile, companies reduced their staff numbers at a marginal rate.
On the price front, output charges increased at a negligible pace, despite an acceleration of input cost inflation to a three-month high.
Moderate drop in business activity
Private sector output in Northern Ireland fell further during October, although the pace of reduction eased to the slowest since March. In contrast, activity growth was registered across the UK economy as a whole. Falling new business was cited by panellists as the main reason behind the latest contraction. However, similar to the trend for activity, the rate of decline in new work eased to the slowest in seven months. Where a reduction in new orders was recorded, this was commonly linked to muted client demand. Incoming new work and activity both fell across three of the four sectors monitored by the survey, with manufacturing the exception.
Job shedding remains marginal
The level of outstanding business in the Northern Ireland private sector fell for the forty-eighth consecutive month during October. Further backlog depletion predominantly reflected fewer intakes of new business and a lack of pressure on operating capacity. Nonetheless, the rate at which firms reduced their backlogs of work eased to the weakest since February 2008.
Consequently, companies continued to reduce their workforce numbers on average. The latest decrease extends the current period of job shedding to 44 months. However, the rate of decline was only marginal. Manufacturing was the only sector not to record a fall in staff levels during the latest survey period.
Input cost inflation hits three-month high
Input cost inflation accelerated in October, with higher fuel and energy costs the main factors behind the latest rise. The increase in input costs was the steepest in three months, and faster than the UK economy average.
Despite the increase in average costs, October data signalled a negligible rise in output prices set by Northern Ireland private sector firms. Charge inflation has been recorded in six of the past ten months. Panellists attributed weak pricing power to strong competition for new business. Retailers and manufacturers recorded a rise in average tariffs since September, while construction firms and service providers saw a decrease.