Manufacturing growth ‘shows sector is recovering from Gallaher closure’

NORTHERN Ireland’s manufacturing sector experienced its fastest rate of output growth in almost seven years between July and September.

However, output in the local services sector fell over the same period, underperforming in comparison to the rest of the UK.

Figures from the Northern Ireland Statistics and Research Agency (NISRA) showed a 6.6% year-on-year growth in manufacturing output in the third quarter of 2018 — the first annual increase in output in six quarters.

Ulster Bank chef economist Richard Ramsey said the results suggested that Northern Ireland’s manufacturing sector was beginning to recover from the loss of the JTI Gallaher tobacco plant in Ballymena.

The development follows what he described as “a recessionary-sized fall” in output of 7.1% between the third quarters of 2016 and 2017.

However, he added that despite the impressive growth rate, output in the manufacturing sector remains 1.6% lower than it was a decade ago, and 5.4% lower than its pre-downturn high in the fourth quarter of 2007.

“UK manufacturing output, on the other hand, is less than 2% below its pre-recession peak,” Mr Ramsey said.

“If the JTI plant hadn’t closed, local output would be at an alltime high.

“Indeed, a number of sub-sectors have reported record highs in recent quarters.”

The third quarter saw very strong performances in the machinery, waste and chemicals sub-sectors.

While new labour market data reflected considerable job creation growth within the private sector, NISRA’s latest data showed that output in the services sector fell 0.6% over the last quarter, well below the UK average.

However, output was still 1.4% up on last year.

“Despite record numbers of service sector jobs, it is noted that services output is still 3.8% below its pre-downturn peak almost 12 years ago,” Mr Ramsey said of the figures.

“Meanwhile, the UK service sector is one-fifth larger in terms of output over the same period.”

Yesterday’s data also hinted at a poor three months for retail. The wholesale and retail trade, accommodation and food services sector fell by 0.8% from the second to third quarter.

But with the of hospitality and food services sector performing strongly recently, the Ulster Bank economist said: “This implies much weaker activity within the retail sector and points to a lack of consumer confidence.”

The only services sector to post quarterly growth between July and September was business services and finance, which rose by 2.1% to reach a seven-year high.