Cause for optimism as Northern Ireland’s economic recovery gathers pace

Northern Ireland’s economic recovery strengthened during Q2 2021 according to the latest Quarterly Economic Survey, with signs of confidence returning to both the manufacturing and services sectors. After reaching record lows across all key indicators in Quarter 2 2020, one year on since the pandemic struck, most key indicators around domestic sales, exports and jobs have continued to show signs of improvement. More key balances are now positive meaning that more businesses are reporting increases in, for example, employment and investment intentions than those reporting a decrease. The manufacturing recovery has been stronger in Northern Ireland than services. In total, only 1 out of 11 key indicators in manufacturing remains negative compared to 4 out of 11 in services. The share of businesses operating at full capacity rose to 44% (Q1 21 25%) for manufacturing and 43% (Q1 21 34%) for services in Q2 2021.

The Northern Ireland economy was already in a fragile position entering the crisis according to previous QES findings. However, COVID-19 has caused the worst QES performance on record. The immediate impact of COVID-19 was much greater than the aftermath of the financial crash in 2008/09.

However, business recovery is on it’s way and that sense of recovery is reflected in the fact that overall more businesses are now reporting increased domestic sales compared to those reporting a fall, albeit that this is coming from a low base following the huge challenges faced by businesses in 2020. In Q2 2021 34% saw an increase in domestic (UK) sales (Q1 21 20%) over the last 3 months, UK sales remained constant for 42% of members (Q1 21 36%) while 24% of businesses experienced a fall in domestic (UK) sales (Q1 21 44%).

Exports suffered particularly although manufacturers have experienced a stronger recovery in export trade in the last two quarters. Employment indicators have not been as badly impacted reflecting the role of the job retention (furlough) scheme intervention in buoying up employee jobs.