Chief Economist’s Weekly Briefing – Hey, it’s complicated!

Data releases are sending out mixed signals to the Bank of England’s MPC. On the one hand, there is rising evidence of growth slowing in Q3 as consumers turned cautious and firms struggled with supply-side shortages. Yet the labour market continues to recover rapidly with any slack declining fast. The latter could push up wages for longer, risking a firming up inflation expectations.

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Chief Economist’s Weekly Briefing – Promising

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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Chief Economist’s Weekly Briefing – Light at the end of the tunnel

It’s less than the first but there’s no masking the impact the second lockdown had on the UK economy. It sent more workers back to furlough, car sales plunging, job postings stalling and footfall dipping. But an earlier than expected arrival of a vaccine could help galvanise the recovery not too far into the New Year, well hopefully!  

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Housing market – Up, flat and down

Like the labour market, Northern Ireland’s housing market has been one of the best performing parts of the local economy. One key difference, however, is the housing market hasn’t captured the record highs and lows that the labour market has enjoyed.  Following the most significant property downturn in UK history, the scars are still apparent in the various aspects of the housing market. While many of the indicators point to significant growth over the past decade, the story is one of recovery has opposed to recovered.  

Up – prices still rising albeit at a weaker rate

The latest batch of housing market statistics reveal that the recovery has succumbed to a slowdown. Property prices are the housing market statistic of choice for small talk at dinner parties.  For the past seven years the chat has been of continued house price growth. However, the latest figures from NISRA reveal that the pace of growth eased to 2.5% y/y in Q4 2019. That’s less than halve the pace of growth recorded the previous year and marks the slowest rate of house price growth since Q4 2013. Nevertheless, the rise in local property prices still compares favourably with the UK (+1.6%) and the Republic of Ireland (+1.0%).

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Chart of the Month – Northern Ireland Home Ownership by Age

10 years ago Northern Ireland’s housing boom was turning to bust.  Back then the focus was on residential property price falls and the collapse in house building. Another less closely watched indicator, rates of home ownership, also plummeted. This trend was accompanied by a corresponding boom in the private rented sector which has more than doubled between 2006-2016.

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