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Economics

Ulster Bank PMI report for Nov 2023

Business activity falls, but to least extent in five months.

Key findings

  • Softer reductions in output and new orders
  • Business confidence at four-month high
  • Solid increase in employment

 

The Northern Ireland private sector remained in contraction mode in November, seeing further reductions in output and new orders. That said, rates of contraction eased from October and business confidence picked up. The headline seasonally adjusted Business Activity Index posted 49.2 in November, up from 46.6 in October and signalling only a marginal monthly reduction in output midway through the final quarter. That said, activity has now decreased in five consecutive months. The service sector bucked the wider trend and posted an increase in activity. Where output decreased, panellists reported weak demand and falling new orders. The rate of decline in new business also softened over the month, however. Total new orders were undermined by a further sharp reduction in new export business. Hopes that activity will rebound from current low levels supported optimism in the 12-month outlook. Business confidence rose to a four-month high. Companies continued to fill previously advertised vacancies in November, resulting in a further increase in staffing levels. Higher capacity and lower new orders meant that firms were able to deplete their backlogs of work to the greatest extent since January 2021. Input costs increased sharply in November, often due to higher wages. The rate of inflation eased slightly from that seen in October, however. The pace of output price inflation quickened slightly, but remained relatively muted amid reports of competitive pressures.

 

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: "Northern Ireland’s private sector remained in contraction in November with business activity and new orders falling for the fifth and sixth successive months, respectively. But in common with most regions within the UK, the pace of decline eased relative to October. Export demand weakened further with orders falling for the seventh consecutive month and at a faster pace than in October. On a positive note, the services sector recorded its first increase in business activity in five months. Both services firms and retailers posted a modest pick-up in new orders last month while the construction industry experienced another sharp fall in new business. Conditions in the labour market remain tight with firms reporting increased wage costs and struggled to fill vacancies with suitable candidates. Nevertheless, the pace of hiring quickened in November due to services firms with construction and retail also adding to their headcount. Manufacturing was the exception, reducing employment for the first time in 11 months. Optimism amongst local firms for the year ahead improved across all four sectors with overall confidence hitting a four-month high. Services and manufacturing are the most confident about business activity in 12-months’ time. Sentiment amongst services firms hit a 22-month high. Given the ongoing cost-of-living squeeze and rising mortgage costs it is perhaps not surprising that retailers remain relatively subdued about prospects for the year ahead. Meanwhile the construction sector, which has reported falling orders for the last twenty-nine months, expects business activity to be flat (at very low levels) by November next year. Given the slowdown in housebuilding coupled with the dire outlook for the public finances in the short-to medium term, this is perhaps not surprising."

 

Please see the regional report in full:

 

Ulster Bank Northern Ireland PMI (PDF, 399KB)

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