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.
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.
Imagine you are a Dragons’ Den judge. The CEO of (a fictional) ‘Grey Enterprises’ is pitching for investment to enable further expansion in its consumer goods business. The firm’s customer base (the over 65s) has grown by one-quarter over the last decade with 1 in 6 of the Northern Ireland population using the product.
Today sees the release of June data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a deepening downturn in the Northern Ireland private sector. Brexit uncertainty led to sharper falls in output and new orders, with firms pessimistic regarding the 12-month outlook.
(up in Q2 y/y but down y/y in June)
New car sales are traditionally viewed as a key barometer of consumer confidence. Despite the labour market being the strongest it has ever been, consumer confidence – viewed through the lens of new car sales – remains uninspiring. Last month proved to be the weakest June for dealers in seven years with 5,170 new vehicles rolling out of showrooms. That was six per cent lower than last year. However, the latest figures follow the best May in 11 years and a mediocre April. As a result, the second quarter still posted a respectable 2.7% y/y rise (+369 cars) and the strongest Q2 in three years.
Economists are stereotyped as being, let’s say, not the most rock and roll people. But of late, those of us working on Northern Ireland have had reason to focus strongly on drugs, cigarettes and heavy metals. That’s because these are some of the subsectors of the economy and the manufacturing sector that have seen the biggest highs or are the most troubled.
About this time last year, the price of beer in Belfast’s now iconic Grand Central Hotel caused much reaction, with its Observatory Bar selling a pint for £8. Clearly, this is a niche indicator, but it led to questions by some observers in relation to what this said about the local economy, the strength of the tourism sector, and the spending power of local consumers.
Despite some notable examples of excellent practice, Northern Ireland’s voluntary sector overall is lagging behind in terms of digital transformation and this is impacting on its ability to remain competitive and deliver services.
Northern Ireland Residential Property Price Index Comment
Northern Ireland’s housing market has been a source of continued positivity in recent years, with housebuilding, prices, transactions and mortgage activity all at multi-year highs. Though the property market remains in recovery mode, rather than recovered, following the biggest residential property downturn in UK history.
Residential property price growth has been slowing in both the UK and Republic of Ireland markets. The latest Residential Property Price Index for Northern Ireland points to a similar trend. Residential property prices posted their first quarterly fall in two years in Q1 2019 with a 1.0% decline. Annual house price growth eased from 5.1% in Q4 2018 to a more sustainable 3.5% in Q1 2019 – a rate that remains above consumer price inflation and broadly in line with average earnings growth. Lower rates of house price inflation (2-3% p.a.) are to be welcomed.