Business

NI private sector contracted by 18 per cent in second quarter under lockdown

The latest composite economic index showed an 18 per cent contraction in the private sector during Q2, but the decline will likely be revised down.
The latest composite economic index showed an 18 per cent contraction in the private sector during Q2, but the decline will likely be revised down. The latest composite economic index showed an 18 per cent contraction in the private sector during Q2, but the decline will likely be revised down.
By Ryan McAleer

THE north’s private sector contracted by 18 per cent in the second quarter under the Covid-19 lockdown, according to new official data.

The Northern Ireland Composite Economic Index (NICEI) is considered our closest measure to GDP, producing quarterly analysis based on the official data available.

It states that economic activity during April, May and June was down 13.6 per cent on the previous three months, an all-time low for the index, which started in 2005, with output in the second quarter down 17.8 per cent on the same period last year.

Growth in the public sector partially offset the overall economic decline, with the private sector dropping 18 per cent over the quarter and 23.3 per cent on last year.

Unusually for Northern Ireland, the index suggests that economic activity fell at a slower rate than UK GDP, which contracted by 19.8 per cent in the second quarter.

Economist Richard Ramsey suggested the index will eventually be revised to reflect a 25 per cent contraction for the private sector in Q2.

“This is due to services sector where Northern Ireland’s hospitality and retail sector reported declines around half that of the UK. That looks odd to me and where I expect revisions to take place.”

The NI Research and Statistics Agency (NISRA) confirmed that the lockdown restrictions resulted in a lower response to its data collection exercises than normal for its Q2 index.

“As a result, estimates for Q2 2020 are subject to more uncertainty than usual and, as such, may be subject to larger revisions than normal,” states the report.

Nevertheless, NISRA’s data confirmed that the lockdown measures introduced at the end of March had the greatest impact on the construction, services and production sectors.

It confirmed the construction sector contracted by 30 per cent in Q2, with services down 17.7 per cent and production down 14.9 per cent.

Taking into account the impact recorded towards the end of the first quarter, the index suggests that the economy has contracted by 17.5 per cent, with private sector output down 22.8 per cent.