Business

Northern Ireland entered a technical recession in third quarter of 2022, official data shows

The north entered a technical recession in the third quarter of 2022, according to Nisra.
The north entered a technical recession in the third quarter of 2022, according to Nisra. The north entered a technical recession in the third quarter of 2022, according to Nisra.

THE north officially entered recession during the summer, official government data indicates.

The latest NI Composite Economic Index showed the economy contracted by 0.3 per cent between and the second and third quarters of 2022.

Although the economy in the third quarter (Q3) of last year was bigger than it was in the July to September period from 2021 (and 4 per cent above pre-pandemic levels), it marked the second successive quarter of decline, crossing the threshold for a technical recession.

Produced by the Northern Ireland Research and Statistics Agency (Nisra), the index is considered the closest measure we have to measuring gross domestic product (GDP).

Despite marginal growth within the public sector and in manufacturing, the 0.4 per cent contraction in construction was enough to pull the index into negative territory during the third quarter.

The index showed output in the north’s services sector in Q3 was unchanged from the previous quarter.

Private sector output in Northern Ireland decreased by 0.4 per cent over the quarter and remained unchanged over the year.

A separate report from Nisra on Thursday revealed output in the construction sector contracted for three successive quarters in 2022.

It found output in Q3 2022 was down by 4.2 per cent over the quarter and 6.2 per cent down on Q3 2021.

The biggest factor appeared to the fall in the ‘new work’ and ‘housing’ categories.

Construction output in Q3 was 4.9 per cent the pre-Covid-19 pandemic level from Q4 2019.

And the situation looks set to get worse in the final quarter. The latest construction monitor from Rics/Tughans on Thursday suggested activity fell again in Q4.

The 0.3 per cent decrease in Northern Ireland’s overall economic output was on par with the rest of the UK, which also saw GDP contact by 0.3 per cent over the quarter.

While UK GDP grew faster over the year (1.9 per cent vs 0.5 per cent), the north’s economy has increased by 4.1 per cent on 2019 levels, whereas the UK has contracted by 0.8 per cent.

However, the north’s economy was in a weaker state in the latter part of 2019 compared with the rest of the UK.

* The NICEI methodology provides a 'close short-term' approximation to the UK GDP series. Nisra advises that due to differences in the underlying methodologies, the measures presented should not be considered as precisely like-for-like. ** Nisra states: 'Ireland’s GDP figure has been volatile over recent years, the Central Statistics Office (CSO) highlights the impact globalisation has had on RoI's GDP figures.
* The NICEI methodology provides a 'close short-term' approximation to the UK GDP series. Nisra advises that due to differences in the underlying methodologies, the measures presented should not be considered as precisely like-for-like. ** Nisra states: ' * The NICEI methodology provides a 'close short-term' approximation to the UK GDP series. Nisra advises that due to differences in the underlying methodologies, the measures presented should not be considered as precisely like-for-like. ** Nisra states: 'Ireland’s GDP figure has been volatile over recent years, the Central Statistics Office (CSO) highlights the impact globalisation has had on RoI's GDP figures.

In its commentary, Nisra said it was evident that the strong recovery in economic activity in the services sector post pandemic was the main driver of growth in the NICEI’s performance over the past three years.

The services sector accounts for just over half of economic output in the north.

“However, the pace of growth in the services sector has slowed somewhat in Q3 2022,” states Nisra’s report.

“This coupled with decreased activity in the private construction sector has led to the NICEI recording negative economic activity for the second consecutive quarter.”