North’s shoppers enjoy last hurrah as recession looms

Shoppers in Northern Ireland are enjoying a last pre-Christmas hurrah but new figures show the region’s economy slowing sharply.

According to the Ulster Bank Purchasing Managers’ Index (PMI) for Northern Ireland, inflation and recession cut output and new orders across business in November.

The index rose to 46 last month from 44.4 in October. However the result still means that business activity still fell, as any reading below the PMI’s benchmark of 50 indicates a slowdown.

Activity in manufacturing, services and construction all fell in November, the seventh consecutive month to show a decline, although it was the least sharp drop since May this year.

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Retail bucked the trend showing a rise in activity to 53.3 following several months of slowdown. Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said the rebound was a surprise in light of several tough months.

“There is also perhaps an element of consumers enjoying a last hurrah for Christmas ahead of a challenging 2023,” he says. “Indeed, when we look at the outlook, retailers are expecting their sales to be lower in 12 months.”

Drop in demand

Mr Ramsey warns that the pace at which new orders fell picked up last month, with all sectors seeing demand dropping.

“Overall, the local private sector is coming to the end of 2022 in a weakened state with 2023 likely to be a very challenging year,” he warns.

However, he notes that manufacturers are more optimistic about their prospects for 2023 despite being hit by falls in output and demand last month.

“This perhaps reflects the nature of the current recession with households and consumer-sensitive businesses likely to experience a longer and deeper downturn than global exporters,” he says.

Businesses are still grappling with skills shortages, a problem that Mr Ramsey maintains will continue next year, but he predicts that falling demand will become more evident in 2023.

The economist says inflation will ease as energy prices fall back next year, while supplies will be less disrupted. These will be among the few positives next year. Inflation was at a 12-month low, with input costs on 76.6 while prices hit 62.5, Ulster Bank says.

The index shows that construction fell to 41.3 in November, while services hit 41.7 and manufacturing slipped to 44.7. Employment growth was almost flat in Northern Ireland last month at 50.1, marginally above the index benchmark.