The North’s private sector economy slowed last month, as business activity growth eased to a 16-month low, with the services and retail sectors leading the slowdown.
October also saw firms’ staff hiring levels dip to the lowest pace for nearly a year. The findings form part of the latest monthly Ulster Bank PMI (purchasing managers’ index) for the Northern Ireland economy and the bank’s chief economist for the region Richard Ramsey said growth rates still compare favourably with long-term averages.
“This slowdown is not unexpected, as growth rates tend to moderate as a recovery matures,” he explained.
All sectors of the North’s economy slowed in October, although construction and manufacturing continue to experience the strongest rates of growth aided by the close proximity of the Republic and Britain.
While services and retail suffered the heaviest growth slowdown, local retailers were the only sector to report an outright decline in business activity.
“It remains to be seen if this is just an adjustment following record rates of growth mid-year, or something more significant. In this respect, the next couple of months will be telling, as we enter the all-important Christmas period,” according to Mr Ramsey.
He went on to say that the North’s real economic problems will come over the medium-to-long-term.
“Despite the overall slowdown in growth, the near-term outlook remains relatively positive, as there is significant momentum in the local economy and its key trading partners — Britain and the Republic of Ireland. This momentum should drive the local economy into 2015.
“Thereafter, the cuts in public expenditure will increasingly act as a drag on economic growth,” he added.
The latest PMI shows that an easing of cost pressures has affected the price of goods and services.
Retail prices, for instance, fell last month at their fastest rate since June 2009, which, according to Ulster Bank, suggests strong competition and heavy discounting.
“An easing of inflationary pressures is also evident, with input costs rising at their weakest rate since June 2012, with the continuing drop in the price of oil and other commodities a major factor,” according to Mr Ramsey.
“The construction industry is the exception, as it is the only sector still reporting very strong rates of input cost inflation,” he added.
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