As a result of the major economic disruption from COVID-19, the latest OECD Economic Outlook projects global GDP to contract by 6 per cent in 2020, while the Euro Area is projected to decline by 9.1 per cent. The UK economy is expected to experience an 11.5 per cent contraction in 2020, the largest fall of the major economies.
The impact of COVID-19 on the Northern Ireland labour market is not fully reflected in the latest estimates, which showed that the unemployment rate fell over the quarter and over the year to 2.3 per cent, the joint lowest on record. The NI rate is below the UK (3.9 per cent), RoI (5.4 per cent) and EU (6.6 per cent) rates.
The employment rate decreased over the quarter but increased over the year to 71.6 per cent. At the same time, the inactivity rate rose over the quarter and over the year (0.3pps) to 26.7 per cent. More timely indicators (experimental Claimant Count and redundancies information) relating to May and June show more fully the impact of COVID-19 on the labour market.
The number of people claiming unemployment benefits increased by 5,700 from April’s revised figure to approximately 65,200 in May while the number of confirmed redundancies (2,663) in the 12 months to May 2020 was 6 per cent higher than in the previous 12 months. A total of 342 redundancies were proposed in May 2020 with a further 1,427 proposed between 1 and 15 June.
The latest Quarterly Employment Survey pre-dates the introduction of any COVID-19 restrictions. It shows that employee jobs increased over the quarter and over the year to a record high of 783,500. Increases were experienced in the services, construction and other sectors, while the manufacturing sector saw a decrease over the year. The services sector accounted for the vast majority (96 per cent) of the jobs rise. Similarly, the private sector accounted for the majority (70 per cent) of jobs growth over the year.
Ulster Bank PMI
The latest results from the Ulster Bank PMI (Purchasing Managers Index) reported further steep declines in the local private sector in May due to COVID-19. Rates of contraction in business activity, new orders and backlogs of work were softer than the all-time lows in April as lockdowns began to ease, but were still sharper than any seen before the current pandemic. Firms again lowered their staffing levels and remained pessimistic regarding the year-ahead outlook.
The remainder of the figures in this update either pre-date or only partially reflect the economic impacts relating to COVID-19.
According to NISRA’s latest House Price Index, house prices in Northern Ireland rose by 0.2 per cent in Q1 2020 compared to the previous quarter and by 3.8 per cent over the year. The Index currently stands 44 per cent higher than the low point recorded in Q1 2013.
Index of Production
NISRA’s latest Index of Production (IOP) has decreased by 3.2 per cent over the quarter and by 4.7 per cent over the year. The UK IOP reported a decrease in output over both the quarter and the year by 2.1 per cent and 5.0 per cent respectively. NI output has decreased at the fastest rate since Q3 2017 and is now at its lowest level since Q4 2017.
The Index of Services (IOS) shows that output has decreased over the quarter and over the year by 4.2 per cent and 4.8 per cent respectively. The UK IOS reported a fall in output over both the quarter and year, by 1.9 per cent and 0.9per cent respectively. Services output recorded its steepest quarterly fall since the series began, with the Index now at its lowest point since Q1 2016.
The latest Inter Departmental Business Register shows that the number of VAT and/or PAYE registered businesses in NI increased by 600 (0.8 per cent) to 76,090 over the year to March 2020. This marked the sixth consecutive year of increase following a period of decline from 2004 to 2014. The number of services businesses grew by 1.6 per cent over the year whilst the number of businesses in the construction sector reached a six-year high, despite remaining 8.3 per cent below the peak in 2010.
In the year to March 2020, the value of NI goods exports (based on HMRC Regional Trade Statistics) was £8.9bn, a decrease of 1.9 per cent over the year. The largest markets for NI exports were the EU (£5.2bn, with £3.1bn of that to the RoI) and the USA (£1.1bn).
If you have any queries please contact firstname.lastname@example.org