PMI: Sharpest decline in new NI business since January 2021

Ulster Bank's latest purchasing managers index (PMI) pointed to further reductions in activity and new orders amid ongoing cost pressures, while business confidence sank further.

That said, companies continued to expand their staffing levels as part of efforts to rebuild workforce numbers following the pandemic.

The monthly survey, which is based on the experiences of hundreds of private sector businesses across construction, manufacturing, retail and services, signalled all sectors saw business activity decline in October. It also revealed the rate of contraction in new orders quickened slightly and was the fastest since January 2021, while new export business was also down sharply.

Ulster Bank's chief economist, Richard Ramsey, said: "Last month saw all 12 UK regions fall into contraction mode as far as business activity was concerned. For NI’s private sector it was the sixth successive monthly fall in activity with all four of the sectors surveyed falling below the 50 expansion / contraction threshold.

"New orders also contracted for the sixth month running with October’s rate of decline the steepest – outside of the pandemic - since January 2011. NI firms also posted the biggest drop in incoming work last month of the 12 UK regions. Cost pressures and economic uncertainty were cited as key factors behind the fall in demand. Export orders remain weak with the latest monthly decline the 45th-in-a-row.

"Once again positives were in short supply and largely confined to employment. Despite falling demand, all four sectors increased their staffing levels in October. Firms suggest that this pick-up in hiring is linked to longstanding recruitment difficulties and rebuilding workforces following the pandemic.

"The sources of inflationary pressures remain broad-based encompassing wages, raw materials, energy and shipping costs. Output price inflation remained elevated but well down on the record rates posted earlier in the year. Indeed, firms raised the prices of their goods and services at their weakest rate in 19 months.

"Given the evolving ‘cost of everything’ crisis it is not surprising that business confidence sank to a 26-month low. All sectors anticipate lower levels of activity in 12 months’ time. Sentiment is not likely to improve anytime soon with this week’s Autumn Statement expected to yield more fiscal pain rather than comfort."