New orders rise at weakest pace in four months

Ulster Bank August PMI Data

New data from Ulster Bank purchasing manager’s index has showcased employment levels on the rise, but simultaneously showing weaker growth of output and New Orders.

August PMI Data

Ulster Bank PMI data from August Info graphic

Ulster Bank PMI data from August signalled a loss of growth momentum in the Northern Ireland private sector,  with new orders rising at the weakest pace in four months.

Although output and new orders continued to rise solidly, the data – which is produced for Ulster Bank by IHS Markit – showed rates of expansion were weaker than recorded in July.

Commenting on the latest survey findings, Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said:

“We’ve perhaps never seen a year when the weather has played such a big role in the Northern Ireland economy. In the early part of 2018, the Beast from the East disrupted business activity, therefore impacting on output.”

“More recently, the incredibly good weather has been cited as a major factor behind faster rates of growth in the private sector during June and July. Perhaps unsurprisingly, given the milder weather, August saw something of a slowdown.”

That said, the rate of job creation picked up, as did business confidence. Inflation of both input costs and output prices eased, but remained elevated.

What does this mean?

“Output and new orders growth both eased to a four-month low in August, whilst export orders saw the weakest rate in 10 months, albeit that it was the 26th successive month of growth,” said Richard.

“Employment fared slightly better, with a modest pick-up in growth from July’s 12-month low. Meanwhile, inflationary pressures eased, according to local firms, but it is worth noting that they remain more marked in Northern Ireland than in any other UK region.”

The headline seasonally adjusted Business Activity Index fell to 53.9 in August from 56.6 in July. The rate of growth was solid and output has now risen in Northern Ireland in each of the past 23 months, but the latest month signalled the weakest expansion since April.

The increase in output in Northern Ireland was also slower than the UK average. All four monitored sectors saw activity rise, although manufacturing was the only one to record a faster rate of expansion than in July.

Concluding, Richard stated: “During the next few months, it will become clearer if the latest slowdown is simply related to an easing back from June and July’s weather-related high, or if this is evidence of an underlying weakness emerging.”

“The fact that construction firms expect activity to fall over the next 12 months, suggests that they think it may be the latter.”

Further PMI material including a chart pack, podcast and infographics are available at www.ulstereconomix.com

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