Another steady dose of upbeat economic data this past week. Starting with confirmation the UK recovery got underway back in February, despite lockdown restrictions, to increased restaurant reservations, job adverts and even traffic on the roads! Locally, hairdressers, beauty salons and non-essential retail are set to reopen this week with gyms and pubs with beer gardens following on 30th April. But there are clouds elsewhere. The world crossed 140 million COVID cases in the past week.
The onset of Spring is a reminder of renewal and growth. And so the world economy continues to heal. That positivity is reflected in the latest economic data as well as IMF’s latest outlook, which points to higher growth and less long-term damage than previously expected. Similarly, the 12-month outlook amongst Northern Ireland firms is at a 13-month high. But what confidence there is could be dented by the current political situation and negative news headlines.
Today sees the release of March data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to output and new orders nearing stabilisation, while employment increased amid growing confidence for the year-ahead outlook. That said, input costs and output prices surged at record rates, while there were widespread reports of supply delays.
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Living with lockdowns. Lockdown restrictions have had the effect of turning economic activity off and on. However, as the pandemic has progressed, subsequent lockdowns have been less severe on economic activity than the first. Many businesses have been able to adapt and function throughout lockdowns or pivot into new markets. The trajectory of economic output has largely followed a bungee jump. The initial fall (Q2) and rebound (Q3) will be the most extreme, but subsequent declines and rebounds will moderate.
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The next step of lockdown easing in England will proceed as planned – non-essential retail, outdoor pubs and restaurants and hairdressers (a massive relief!) will re-open next week. While the data says that household savings pots are ready to lend a big helping hand! And with it the route out of the UK being a G7 economic laggard. As for those of us in Northern Ireland, there is no end of the dodgy haircut, or indicative dates for reopening, in sight.
Continue readingThe Ulster Economix Podcast. The podcast that keeps you up to date with what is happening economy-wise in Northern Ireland. Telling you what you need to know but not necessarily what you want to hear. It is better to be prepared for the economic environment we are operating in and not the world we would like to be in.
If someone had told us a year ago that we were going to go through the deepest recession in a century and end up with an unemployment rate of just 3.7%, this probably would have been considered absurd. Logic would dictate that a double-digit contraction in economic output would create a double-digit unemployment figure. But there has been little logical about the past year – as the Sunday Times columnist David Smith succinctly described it, it has been “the deepest recession, but also easily the weirdest”.
Encouraging signs of an economic recovery in the US, EZ and the UK were upstaged by a boat stuck in a canal. Pre-COVID, the phrase “a lorry has broken down on the Westlink” struck fear into Belfast’s rush hour commuters. Imagine that lorry blocking traffic for days or even weeks. Then scale that up to the global Westlink that is the Suez canal.
…from the first lockdown last spring we continue to find ourselves under partial lockdown. Have we frozen in time? The answer is emphatically not. Reports on the recovery gathering pace continues to flow in, with job adverts the latest to show a marked improvement. Locally, some manufacturing sectors (e.g. pharma) are posting record levels of output. But some of us are not so lucky. Italy has entered lockdown, again!
As far as economic output is concerned, 2020 has been a year of extremes. Record rates of decline in Q2 followed by record rates of expansion in Q3. Lockdown restrictions have had the effect of turning economic activity off and on. However, as the pandemic has progressed, subsequent lockdowns have been less severe on economic activity than the first. Many businesses have been able to adapt and function throughout lockdowns or pivot into new markets. The trajectory of economic output has largely followed a bungee jump. The initial fall and rebound will be the most extreme, but subsequent declines and rebounds will moderate. Not surprisingly, the latest Industrial Production and Index of Services (private sector only) from NISRA revealed further declines in output in Q4 2020. These two indices account for the vast majority of Northern Ireland’s Composite Economic Index. Given the scale of the declines revealed today, it is inevitable that the Composite Economic Index (a proxy for GDP), when published next month, will post a sizeable contraction.
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