Stronger than expected. Two surveys for the second quarter of 2019 revealed surprisingly strong output performance for the industrial (mostly manufacturing) and services sectors. The latter signalled a 0.8% q/q rise in Q2 which marked the fastest pace of growth in output in five quarters. However, this increase simply reverses the fall in the previous quarter. As a result, Northern Ireland’s service activity has been flat for the first half of the year. Furthermore, the rate of growth on a year-on-year basis (Q2 2019 relative to Q2 2018) is a very pedestrian rate of growth (+0.5%) for the economy’s largest sector.
Last week marked back to school for many households and holiday memories were fading fast. But while pictures captured on smartphones will provide reminders of the summer, what will perhaps stick in the mind most for many who holidayed abroad is the expense, with the weakness of Sterling the fly in the sun lotion.
Over the last week the government’s working majority was reduced from plus 1 to minus 45. There is still no clarity on the Brexit outcome or the timing of a general election. All of this against the backdrop of a global manufacturing slow down – the UK, Germany, the USA and China all have recorded weakness in manufacturing activity. At least, America and China have agreed to resume trade talk in early October.
Today sees the release of August data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – suggested that Brexit and associated economic uncertainty led to ongoing declines in the Northern Ireland private sector during August. Marked reductions in output and new orders were recorded, while business confidence hit a new low and job shedding intensified.
All eyes were on political theatre in Westminster last week. No-deal Brexit looks more likely. And with it some economic disruption – how much is unknown. The global economic outlook is not promising: the US and China are still locked in the trade war and the Eurozone is fighting to stave off a recession.
Imagine taking out a mortgage and not only having to pay no interest, but actually being paid by your bank to borrow. It sounds like something from a Carlsberg ad, but it is the reality at present in Denmark, where negative interest rates are in place.
US/China trade tensions are intensifying. The Chinese authorities announced $75bn 5-10% tariffs on US imports, targeting cars, oil and soya. US President Trump retaliated, unveiling further tariff rises though his stance at the latest G7 meeting was conciliatory. Meanwhile, Federal Reserve Chair Jay Powell hinted at another rate cut soon.
The latest slew of economic data will leave many wishing that government statisticians had taken a longer summer holiday. Faced with a slowdown in world trade, the German economy experienced a mild contraction last quarter, while prospects for the UK and US look ever more reliant on consumers.
One direction. Northern Ireland’s house price recovery is six-years old. For twenty-three of the last twenty-five quarters residential property prices have gone one way – up! Despite this significant run of steady price rises, less than one-third of the 57% drop in prices that occurred between Q3 2007 and Q1 2013 has been recouped so far. As of Q2 2019, local house prices were still 39% below Q3 2007’s ‘freak peak’.Continue reading
Will it? Won’t it? On Friday we learned that, after delivering a strong first quarter performance, UK GDP contracted by 0.2% in the three months to June. This marks the first outright decline in economic activity since 2012 and puts the UK uncomfortably close to ‘technical recession’ territory just as global growth is faltering.Continue reading