Business

Northern Ireland economy officially in decline in second quarter

The north's economy slowed in the second quarter of 2022, recording the first decline in output for five quarters.

THE north’s economy was officially in decline in the second quarter of 2022, official figures have confirmed.

The Northern Ireland Composite Economic Index fell by 0.1 per cent between the first and second quarters of the year, the first decline in the index for five quarters.

Produced by the Northern Ireland Research and Statistics Agency (Nisra), the index is considered the closest thing the north has to measuring its gross domestic product (GDP).

Although up 2.4 per cent up over the year, the April to June index is widely expected to be the first of two successive quarterly declines, which would mean the economy is in a technical recession.

But the lag in publishing official data here means a recession will not officially be declared in Northern Ireland until January 2023, when the third quarter index is published.

The quarterly decline was in line with UK GDP over the same period, which was 0.1 per cent down in the second quarter (Q2), although the UK economy grew by 2.9 per cent over the year.

The Q2 index showed output in the north’s private sector declined by 0.2 per cent from the first quarter (Q1), while the public sector increased by 0.3 per cent.

Ulster Bank’s chief economist Richard Ramsey said the decline was mainly due to output falling in the services sector,

Nisra said the sector, which accounts for 53 per cent of economic output in the north, had been the main driver of growth over the quarter, year and since the outbreak of the pandemic.

Richard Ramsey said Ulster Bank’s recent purchasing managers’ index (PMI), which is based on the feedback from the north’s private sector, points to the economy contracting in the third quarter.

A separate report published by Nisra on the north’s construction sector on Thursday showed output in the building sector fell by 0.6 per cent in the second quarter, falling 3.9 per cent over the year.

Pointing to a significant slowdown in broader construction, the report said ‘new work’ declined by 5.1 per cent between Q1 and Q2 of 2022, with repair and maintenance work falling 1.3 per cent.

However, the slowdown did not extend to house building, which increased by 6.5 per cent in Q2.

Nisra said while economic output in Q2 was 4.6 per cent higher compared to pre-pandemic levels (Q4 2019), the north’s economy was still 0.2 per cent below the record peak of Q2 2007.