THE north’s private sector recorded a marked improvement in economic output at the start of 2022, driven by the performance of manufacturers, new analysis from Ulster Bank shows.
Output between December and January increased at its fastest rate since June last year, according to the latest purchasing managers index (PMI).
New orders also rose for the first time in five months.
The monthly survey, which reflects the experience of 200 private sector firms from around the north, is considered a reliable early indicator of how the economy is performing.
The PMI suggested growth in private sector was driven by the manufacturing sector.
But the local construction industry bucked the wider UK trend by posting a further fall in activity at the start of the year, its seventh successive month of falling output.
Inflation continued to be a massive issue for businesses. But the latest PMI showed input cost inflation increased at its slowest rate in five months during January.
Retailers once again posted the fastest increase in costs last month.
Accordingly, firms continued to pass on the costs, but again, at the softest rate since September.
The north’s services sector also saw a rebound in activity as the Omicron wave gradually faded and restrictions in hospitality were eased toward the end of January.
“Northern Ireland’s private sector has shaken off the Omicron induced slowdown seen in December and has started 2022 on a positive note,” said Ulster Bank’s chief economist Richard Ramsey.
“Employment also increased for the eleventh month running, but with firms finding it increasingly difficult to get the staff they want, the pace of hiring did slow to its weakest rate since March.
“Indeed, retail and construction actually cut their headcount,” said the economist.
“Whilst inflationary pressures have moderated from their record highs, they remain a significant challenge.
“Mounting wage and energy costs are leading to ongoing increases in input costs and companies are also continuing to pass this on by increasing the prices they charge.”
The PMI showed that despite the issues facing the economy, business confidence grew higher in Northern Ireland during January, particularly among manufacturers and service providers.
“Overall, the January PMI is a positive report but whilst Omicron and indeed Covid as a whole are fading, skills shortages, the cost-of-living crisis, and Northern Ireland’s latest round of political instability will bring plenty of headwinds to challenge firms in 2022,” added Mr Ramsey.
