Source: Markit Economics

August data from the latest Ulster Bank Northern Ireland PMI -- produced for Ulster Bank by Markit Economics - -  pointed to reductions in both business activity and new work for the twenty-first successive month in August, although rates of decline continued to ease. Meanwhile, companies’ pricing power remained weak, with average charges falling sharply and input costs increasing at the most marked rate in four months.

Commenting on the latest survey findings, Richard Ramsey, NI Economist, Ulster Bank, said: “The latest PMI survey offers further encouragement that NI’s private sector should return to positive growth before the end of the year. While the majority of firms are still experiencing decreasing levels of output, the latest survey indicates a significant rise in the number of companies reporting growth. More than 1 in 4 firms reported a rise in business activity in August, a figure not seen since October 2007. It is a similar story with new orders, with 30% of local companies signalling a rise in new incoming business. This represents the largest share in two years. Despite this improvement, NI remains the only UK region still waiting to return to growth.

“At a sector level, the most noticeable difference between the performance of the NI and UK economies is within services (excluding retail). In the UK, the services industry is currently the strongest performing sector, whereas in NI, service sector firms reported the sharpest fall in output of all the sectors.

“On a positive note, the pace of job losses continues to ease, with local firms reporting a more moderate decline in employment levels relative to their UK counterparts for the third month in a row. NI’s construction sector continues to bear the brunt of the ongoing job losses.”

The main findings of the August survey were as follows:

Slower reductions in business activity and new work

August figures indicated that business activity amongst Northern Ireland private sector firms continued to fall over the month. However, the pace of reduction eased to the weakest since January 2008. Those survey participants that reported a decline in business activity generally linked this to reduced levels of new work and unfavourable trading conditions.

Incoming new business received by Northern Ireland private sector companies fell again in August, extending the current period of decline to twenty-one months. Nonetheless, the overall pace of contraction eased to the least marked for eighteen months. Many respondents cited poor economic conditions as having a negative impact upon sales levels.

Job shedding continued

Staffing levels in the Northern Ireland private sector were reduced for the eighteenth successive month in August. That said, the rate at which job cuts were implemented continued to slow, with the latest decline the weakest since April 2008. Redundancies and the non-replacement of voluntary leavers were cited by survey participants as measures used to lower employment numbers.

Prices charged reduced sharply, despite rising costs

Input price inflation was registered in the Northern Ireland private sector for the sixth month running in August. Where an increase in cost burdens was signalled, this was frequently linked to rising prices for a range of raw materials and oil-related products.
Output charges were reduced for the eleventh consecutive month in August, mainly reflecting increased competition and initiatives aimed at attracting new business. The pace at which tariffs were lowered remained steep, but slower than the record decline registered in December 2008. By sector, discounting was most pronounced in construction.