Today sees the release of May data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to marked improvements in new orders and output. The extent of the increase in workloads meant that firms expanded their staffing levels at a pace unsurpassed in almost 19 years of data collection. That said, inflationary pressures remained elevated, with the pace of increase in input costs accelerating again.
Northern Ireland new car sales posted another freak year-on-year growth rate in May. There were 3,879 new cars sold locally last month. That represents a whopping 2,594% y/y increase on May 2020’s total (144) and compares with the 13,629% y/y rise recorded in the previous month. These jaw dropping growth rates are explained by the fact that comparisons are being made with last year’s lockdown lows. For example, last April saw just 24 new cars sold. But these seemingly impressive growth rates, while welcome, compare unfavourably with pre-pandemic car sales volumes.
It could be said that we have a Ketchup bottle economy at the minute. Shake a ketchup bottle and nothing happens. But eventually we will get covered in red sauce as the blockage is worked free. Something similar is happening in global supply chains at present and this is impacting on all of our lives.
Another week of upbeat economic data. UK Businesses have now joined consumers in setting records for high performance. But the ‘brightening outlook comes with some discomfort’, as OECD describes it. With a surge in the spread of the delta variant, UK officials are now drawing up a contingent plan for possible delay in June 21 easing.
Amidst the steady drip of very good news on the recovery, last week came a reminder that we’re not out of the woods yet. Rising cases of the Indian variant (or Delta to use the World Health Organisation’s new labelling) underlines that while the risks posed by the virus have certainly diminished, they have not been eliminated.
The 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.
It could be said that we have a Ketchup bottle economy at the minute. Shake a ketchup bottle and nothing happens. But eventually we will get covered in red sauce as the blockage is worked free. Something similar is happening in global supply chains at present and this is impacting on all of our lives.
Inflation has been the buzzword in recent weeks around the world. Households are experiencing a pick-up in both consumer prices and house prices. Meanwhile businesses are reporting soaring input costs such as increased freight costs and rising raw material prices. These additional costs will be passed onto firms’ customers in due course.
What does a combination of households sitting on cash piles and firms on a hiring spree give you? A roaring UK economy. Add to this the low base from last year and growth figures are going through the roof. But a note of caution is due. The end of government support plus (hopefully) transitory inflation could take some of the shine away.
The latest NI housing statistics, transactions, starts and completions for Q1 2021 were released this morning by NISRA.
Property prices, transactions, starts and completions all rose year-on-year rose in Q1 2021. Estate agents and house builders have experienced a ‘V-shaped’ recovery but how long will the good times last?
Reality check – Inflation has been the buzzword in recent weeks with cost increases and price rises becoming more apparent amongst businesses and households. UK CPI inflation jumped from 0.7% y/y in March to 1.5% y/y in April. That represents the largest monthly increase since 2009. Residential property prices are rising at an even faster pace and have reached their highest level in 12 years. Northern Ireland’s Residential Property Price Index increased by 1.1% q/q in Q1 2021 with prices 6.0% higher relative to the corresponding period a year ago. That marks the largest year-on-year increase since Q3 2016 and is more than double the rise in private sector rents (+2.6% y/y). Northern Ireland’s residential property inflation is running at twice that of the Republic of Ireland (+3.0% y/y) but is below that of the UK (+9.1% y/y). The latter represents the fastest rate of residential property price inflation in the UK in 13.5 years. Local residential property prices have now increased by 53% relative to their trough eight years ago. But despite this growth, the standardised residential property price (£149,178) is still one-third below Q3 2007’s freak of £224,670. The latter doesn’t take account of inflation. Adjusting for inflation, Q3 2007’s peak was £301,000 in today’s money – double the price of houses some 13.5 years later.
Twelve months have passed since the labour market reacted to the pandemic induced slump in economic activity. The initial impact was most noticeable on the claimant count (the numbers claiming unemployment related benefit) and the HMRC’s payrolls data. The former posted a record monthly rise in April and peaked at 63,800 in May. That was more than double March’s figure of 30,500. Meanwhile the number of employees on the HMRC’s payrolls data tumbled by almost 12,000 over the same period. Unprecedented employment support measures, such as the Job Retention Scheme (JRS), steadied the ship, but 2020 was still a record year for redundancies.
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The UK economy has emerged from the second wave of the virus with limited short term damage. GDP contracted by 1.5% over the first quarter, less than feared at the onset of the third lockdown. Even better, high frequency indicators are pointing towards a brighter outlook. All 12 regions reported growth in April with Northern Ireland posting its first month of private sector expansion since last September. Local firms are the most optimistic about the year ahead since the pandemic struck.
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