Labour market recovery or false dawn?

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Northern Ireland’s latest labour market statistics smack of ‘nothing to see here…just move along’. Other than the record number of redundancies proposed in 2020 (11,000), there are few signs that the economy is in the midst of an economic crisis. Indeed, many of the indicators point to an improvement. For example, the unemployment rate and the number of individuals claiming unemployment related benefits is falling. Meanwhile the total hours worked and the number of employees on payrolls continued their upward trends. Talk of a labour market recovery, however, is premature. The Chancellor recently stated that the economy is going to get worse before it gets better. Similarly, the labour market will deteriorate before a sustainable recovery takes hold. Unprecedented employment support measures, such as the Job Retention Scheme (JRS) and the Self-Employment Income Support Scheme (SEISS), largely inoculated the UK and NI economies against a severe labour market shock. But once these measures are withdrawn a surge in unemployment in the second half of the year is inevitable.

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Chief Economist’s Weekly Briefing – Feeling the chill

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The going was expected to get tough. Whether it is the newly released transactions data or the familiar PMI prints, indications are the UK economy’s Covid recovery has gone into reverse. But we could recover “at a rate of knots” from the second quarter, as per the Bank of England’s Chief Economist, with the roll out of the vaccine. Fingers crossed!

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The year of pent-up demand and pent-up problems

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January 2021 represents more than just the start of a new year. It marks the new post Brexit-era, and it brings us a step closer to a post-Covid era with the ramping up of the vaccine roll out. In some respects, this month therefore marks a turning point for Northern Ireland and our economy, and a time when we should really take stock of where we are and where we are going in the future. 

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Chief Economist’s Weekly Briefing – Patience

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It’s going to be some more time before we can wake the UK economy from its economic slumber. Last week, virus-led restrictions tightened in Scotland, Wales & Northern Ireland. And there are ominous signs of further weakening activity in January. That said, the November GDP print has strengthened hopes of lesser-than-expected damage in Q1 2021.

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Economy to grow 5% in 2021 but recovery will be a squashed W

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Record rebound – Northern Ireland’s economy witnessed a record rate of expansion during the third quarter with output rising by 15.5% q/q. That is according to NI’s Composite Economic Index (NICEI) which is the closest statistic to GDP that we have. Q3’s record rebound followed four successive quarters of contraction and a record rate of decline of 13.7% q/q in Q2. The pandemic has necessitated the introduction of lockdowns which switched off large parts of economic activity.  Conversely, the lifting of restrictions in Q3 led to a reopening of the economy and a subsequent surge in economic activity. 

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Decline in activity softens, while employment nears stabilisation

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Today sees the release of December data from the Ulster Bank Northern Ireland PMI. The latest report – produced for Ulster Bank by IHS Markit – signalled that the Northern Ireland private sector remained in contraction, but rates of decline in output, new orders and employment all softened. Meanwhile, inflationary pressures strengthened.

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Biggest drop in new car sales since WW2

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Biggest annual decline in peacetime – 2020 has been a year of record rates of decline on a number fronts, not least within the car industry. Brexit and lockdowns were two headwinds for the sector that dampened demand. New UK car sales slumped by 29% last year which represented the steepest annual fall since World War II (1943) with sales volumes plumbing their lowest level since 1992.  2020 marked the fourth consecutive year of declining car sales in the UK with a cumulative decline of 40% (1.1 million cars) since 2016’s peak. Electric vehicle sales have been one bright spot at the expense of petrol and diesel engine vehicles. Battery electric vehicles and plug-in hybrid electric vehicles saw sales soar by 186% and 91% respectively last year. As a result, electric vehicles now account for 1 in 10 of all new car sales, up from 1 in 30 in 2019.

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Chief Economist’s Weekly Briefing – ‘Exhausted’ but ‘hopeful’

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This week’s title draws on the most popular words being used to describe 2020 and 2021 according to a recent survey. Well barring the expletives! The fight against the virus has left the world worn out but this has not prevented households and businesses from hoping for a better future, even when new challenges continue to arise. So it’s a hopeful note that we end our year on.

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What goes down must go up!

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2020 has been the year of the unprecedented rate of decline. New car sales, property transactions, housebuilding, manufacturing output, services activity or tourist numbers have all plunged on a scale that we have never seen before. Lockdown restrictions have been responsible for this ‘switching off’ of economic activity and this was most pronounced in the second quarter. When swathes of the economy are shutdown, the inevitable consequence of the subsequent lifting of restrictions means output / activity can go only one way – UP!

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