coronavirus

Six months on, but what can we expect next?

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Six months on from the first COVID case in Northern Ireland, even the most pessimistic forecaster would not have predicted the whirlwind that has hit the economy in that period. We haven’t received the official confirmation, but there is little doubt that Northern Ireland has experienced its fastest, deepest recession on record. The government induced lockdown saw aspects of the economy – including car sales, which saw a 99.4% decline in April – grind to a halt and many other aspects severely disrupted.

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Chief Economist’s Weekly Brief – Step by step

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A week with cause for cautious optimism. The report card on various countries reopening show no upturn in cases in Western Europe. While a better than expected US jobs report and recovering PMIs in China provide some encouragement. But the damage wrought is extensive. It will be a long, arduous journey through recovery with the risk of setbacks along the way considerable. The rising number of cases in the southern US a prime example.

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Chief Economist’s Weekly Brief – Bottoming out?

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Last week, several economies reopened without a material evidence of a spike in infection rates, well, so far.  That said, the northern-southern hemisphere divide in the number of cases continues to widen, leading some (incl. the Fed) to believe that there might be a second wave. Two risks resurfaced – escalation of US-China trade tensions and disruptive Brexit. On the activity front, data for May suggests that the worst might be behind us.

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Spike!

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Incoming economic indicators have been hitting record highs and lows of the negative variety. April was the first month of a full lockdown so data linked to this month has been dire. All of the UK regional PMIs posted record lows in April with Northern Ireland the weakest of all. New car sales has been another area showing staggering rates of decline, with the UK and NI posting 97% and 99% year-on-year declines respectively. Last month saw the fewest new car sales since 1946. Comparisons with WWII are coming in thick and fast. Staggering rises, as opposed to falls, are the concern with global unemployment trends. For example, the US unemployment has already hit a post-WWII high of close to 15%. Today we finally got the first meaningful  indications of the COVID-19 impact filtering through into the UK and Northern Ireland official labour market data.

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Chief Economist’s Weekly Brief – More of the same

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The easing of lockdown restrictions, and with it the economic recovery, looks set to be taken tentative step by tentative step. Witness South Korea having to reintroduce some distancing measures. Meanwhile data is putting more colour on the enormous scale of the economic damage. No surprise that the Bank of England is envisaging the worst downturn since 1706. Even worse than the “Great Frost” of 1709.

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Severe declines in output and new orders recorded in April

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Today sees the release of April data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to a severe contraction of the Northern Ireland private sector, and one that was by far the worst since the survey began in August 2002. Output and new orders were particularly badly affected amid company shutdowns, while confidence around the 12-month outlook continued to fall.

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Millenial Déjà Vu

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Last year was one of the best years ever to enter the labour market in Northern Ireland. Jobs were aplenty across a broad range of disciplines. It was arguably the case that anyone who wanted to engage in work could find an opportunity to do so. Indeed there wasn’t the supply of labour to meet employers’ demand, making it a seller’s market. Employers increased salaries to address widespread skills shortages – particularly in ICT. Even lower and unskilled jobs saw significant pay growth with big increases in the National Living Wage. Fast forward a few months and the labour market landscape is unrecognisable. 2020 will prove to be a contender for the worst year ever to enter the labour market in Northern Ireland.

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Chief Economist’s Weekly Brief – Dichotomy

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April has been a month of contrasts. Multi-year low prints on economic activity in both the US and the Euro area, with worse to come, on the one hand. While equity markets continued to push higher from their late-march lows, buoyed by unprecedented monetary and fiscal stimulus. Markets will always run ahead of the economy. The question is, with so much uncertainty on the pace of recovery, have they overdone it? 

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