Northern Ireland’s economy is struggling with soaring inflation but activity is still managing to grow.
That is the key takeaway from the latest PMI report from Ulster Bank which said firms reported lower rates of growth in output, in new orders and in employment in April, as well as a hike in input costs.
It said the PMI index for Northern Ireland stood at 54.8 last month, down from 56.3 in March and extended a slide in activity which began in January; a rate above 50 reflects growth.
READ MORE: {}
Cost pressures remain the most dominate pressure on businesses with input costs rising at the second highest rate on record, a situation which prompted firms to lift their prices at the fastest pace since the PMI survey began 20 years ago.
From a sector point of view, manufacturing managed to grow last month but both output and new orders saw a sharp slowdown in growth. The services sector, however, bucked the trend, reporting faster rates of growth in new orders and employment in April. Once again, construction reported a fall in output and a sharp decline in incoming orders.
Continued labour shortages across the economy was also cited as a dominant feature of the April report, with both manufacturers and the service sector continuing to struggle to find the right skills.
Added to still-strong demand, order backlogs have also risen sharply, a situation which has been accentuated by lengthening supplier delivery times.
Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said there is cause for some optimism in the short term but the remainder of the year may be difficult for many businesses.
“These backlogs should guarantee relatively strong rates of growth in business activity in the near term but optimism for the year ahead remains relatively muted with the cost-of-living crisis making retailers the least optimistic for the year ahead,” he said. “With the economy set to deteriorate in the second half of the year, the business community will be hoping for a quick formation of a Northern Ireland Executive to help deal with short term challenges and to progress much needed long-term reforms and investment.”