Rising NI output still behind UK average

ECONOMIC output in Northern Ireland improved by 1.2% in the second quarter of 2018, but a leading economist has said longer-term analysis shows we remain well behind the UK average.

According to the Northern Ireland Composite Economic Index (NICEI), which is a similar measure to Gross Domestic Product (GDP), economic output rose 1.2% over the quarter and 1.6% compared with the second quarter of 2017.

It compares to the 0.3% contraction in the first quarter of 2018, which had sparked fears that a new recession could be on the way.

The increase in output in the second quarter was largely driven by the services and construction sector.

While that growth rate was better than UK GDP, senior economist at Ulster University’s Economic Policy Centre, Esmond Birnie (right) described the measure as “volatile”, adding that it had indicated output declines in six of the last 22 quarters.

“The safest way to interpret the NICEI data is to stand back and try to pick out the longer term trends,” he said.

“Trend growth here remains far behind the UK average: 0.3% growth when the average output level for the most recent four quarters is compared to the previous four quarters, which compares to 1.4% for the UK. Northern Ireland trend growth has been decelerating for some time.

“Perhaps most importantly, the NICEI suggests we are still a bit off getting back to the output levels last reached just before the banking crisis of 2007-08.”

Meanwhile, analysis of the Northern Ireland construction sector showed that the total volume of output in the second quarter of the year increased by 6.2% compared with January to March 2018.

However it was 2.5% lower compared to the same quarter in 2017.

The data compiled by the NI Statistics and Research Agency (NISRA) is based on estimates of construction output carried out in Northern Ireland between April and June. It excludes work carried out by NI construction firms in other parts of the UK or elsewhere. Robert Gibson, from business advisory firm Grant Thornton, said that after a subdued start to the year, the figures showed the volume of activity in the local construction sector during the second quarter returned to levels similar to 2017.

“Although the total volume of work in the three months to June was around 2.5% lower than the same period last year, it increased by 6.2% compared to the first quarter of 2018,” he said. “Housing output increased, including a sharp rise in repair and maintenance contracts.

“However, new public infrastructure work effectively flatlined while in the ‘other work’ sector, public spending on new projects was the only sub-component to record a decline.

“This lack of investment may reflect the continued absence of the Stormont Executive and will add to concerns in the industry of a continuing drag on construction output in the future.

“Considering the wider picture, although overall workloads remain almost a third lower than the 2007 peak, the trend over the past five years has been of rising activity,” Mr Gibson added.