Business

Manufacturing output at seven-year high - but it's service without a smile

Manufacturing output in Northern Ireland was running at its highest level in seven years this summer, according to new government statistics
Gary McDonald Business Editor

NORTHERN Ireland's manufacturing sector enjoyed its fastest rate of output growth in almost seven years this summer.

Figures from the NI Statistics & Research Agency reveal that manufacturing output rose by 6.6 per cent during the third quarter (covering July, August and September) and was the first increase in a year and a half.

But there was less to cheer in the services sector, where third quarter output slipped back 0.6 per cent, although it was still 1.4 per cent above the corresponding period a year ago.

"These are two sectors heading in two very different directions," said Richard Ramsey, Ulster Bank's chief economist in Northern Ireland.

"On the industrial/manufacturing front, it is clear that Northern Ireland firms are enjoying robust growth and outperforming their UK counterparts.

"Conversely, the region's private services sector output fell in quarter three, with most of the sub-sectors under-performing vis-à-vis their UK peers."

On manufacturing growth, the closure of the JTI cigarette plant in Ballymena produced a recessionary-sized fall in output (down 7.1 per cent) between the third quarters of 2016 and 2017, but this negative JTI effect has now fallen out of the figures.

"But despite Northern Ireland manufacturing's impressive growth rate, output remains 1.6 per cent lower than it was a decade ago," Mr Ramsey added.

"Furthermore, manufacturing output is 5.4 per cent lower than its pre-downturn high in quarter four 2007. UK manufacturing output, on the other hand, is less than 2 per cent below its pre-recession peak.

"If the JTI plant hadn't closed, local manufacturing output would be at an all-time high. Indeed, a number of sub-sectors have reported record highs in recent quarters.

All-time output high were recorded over the quarter by two manufacturing sectors - machinery and equipment (up 16 per cent) and chemicals and pharmaceuticals (up 18 per cent).

And within the wider industrial production sector, water supply, sewerage & waste management (which includes recycling) saw growth of almost 12 per cent.

"This highlights some of the sector specific strengths within Northern Ireland, and firms capitalising on strong global demand," Mr Ramsey added.

But he said it was "services without a smile" as growth rates in that sector compared unfavourably with the UK.

"Despite record numbers of service sector jobs, output here is still 3.8 per cent below its pre-downturn peak almost 12 years ago, whereas the UK service sector is a fifth larger in terms of output over the same period," Mr Ramsey said.

Meanwhile a separate NISRA statistical report into pay at the NI Civil Service revealed that the average basic pay of staff there is £25,225, which is up on the previous year.

Some 97 per cent of staff received an increase in pay between last year and this, with 79 per cent of industrial staff enjoying rises of between 4 per cent and 5.9 per cent.

At senior grade level, the increases were between 2 per cent and 3.9 per cent, largely because the majority of staff are not on the maximum of their pay scale and are on progression up the bands.

Average earnings for full-time civil service staff, at £483 a week, is lower than the overall Northern Ireland public sector wage (£562 a week).

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