The soaring rate of inflation has tempered growth in the Northern Ireland economy but companies continue to hire at pace.
Those are the findings of the latest Purchasing Managers鈥 Index report from Ulster Bank which showed the province鈥檚 economy was still growing last month, but only just.
Input costs and output costs rose at a record rate as higher charges for energy, freight and fuel, materials and increasing wage expenses.
Because many of the costs are being passed on to customers by businesses, new orders fell while the constrained supply chain showed no sign of easing with deliver times lengthening and backlogs of work increasing.
The findings chime with latest figures from the Office for National Statistics which show consumer price inflation stood at 4.5% last month.
Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said the sustained period of inflation and supply chain pressure are starting to bite on business performance.
鈥淭he rate of growth in business activity slowed during October while input cost inflation rose at a record rate,鈥 he said. 鈥淭his isn鈥檛 surprising given the incoming news flow regarding energy costs and firms are passing these costs onto their customers by raising the prices of their goods and services at a record rate.
鈥淧erhaps the most telling indicator is new orders which shows that incoming business fell for the second month running with all sectors bar manufacturing posting a fall in new orders. Construction saw the steepest decline, with firms citing price increases as a factor putting off customers.鈥
But with companies rushing to raise capacity, staffing levels increased markedly in October, the fastest pace since May.
鈥淔irms reported one of the fastest increases in headcount in the survey鈥檚 history,鈥 he said. 鈥淢anufacturing led the way in this, with firms in the sector posting the fastest rate of job creation on record. They are recruiting at pace to increase their capacity to deal with a buoyant order book and mounting backlogs.
However, expectations that inflation will remain high are dented the outlook for the future.
鈥淪urvey respondents鈥 expectations for activity in 12 months鈥 time slipped to a nine-month low. Whilst manufacturing, retail and services firms still expect growth, construction businesses expect activity to fall. The latest survey鈥檚 theme of slower growth, higher inflation and supply chain disruption are expected to continue in the run-up to Christmas.鈥
