Belfast Telegraph

Construction, services and industrial production on rise as recovery continues to gain pace

By Margaret Canning

The Northern Ireland economy drew three aces yesterday, as output figures for the second half of last year showed growth in most areas – with one manufacturing sector even surpassing its pre-downturn best.

Construction, services and industrial production all posted robust rates of growth during the third quarter of 2013.

The services index rose by 1.4% over the quarter and 1% over the year. Production output was up 4.3% year on year, and by the same percentage quarter on quarter.

Construction output was up 2.4% compared to the quarter before – but was 2.6% lower compared to the same quarter in 2012.

According to close analysis of the output indices by Ulster Bank economist Richard Ramsey, the production category of transport equipment, itself a sub-sector of engineering, saw output surge by 8.8% – surpassing its pre-downturn peak by 13%.

That sector includes heavy-hitters like Bombardier and Wrightbus, which both announced hefty orders last week.

The buoyant sectors of pharmaceuticals and food, drink and tobacco each enjoyed growth of 4% quarter on quarter.

There was close to 4% growth in the services sub-sector which includes hotels and restaurants, new car sales and retail, signalling that consumers are feeling more confident about spending money.

Mr Ramsey said the sector was feeling the benefits of a busy 2013.

"Clearly events such as the World Police and Fire Games, and Derry-Londonderry UK City of Culture have provided a much needed boost to this sector and brought in much needed consumer spending from beyond these shores," he said.

The services category of transport, storage, information and communication (including freight and passenger transport, postal services as well as IT activities) enjoyed a 6.7% growth spurt, the fastest rate of growth in output since the survey began in 2002.

Danske Bank chief economist Angela McGowan said: "As the services sector represents around 66% of Northern Ireland's private sector, this improvement augers well for the overall economic recovery."

John Armstrong, the Construction Employers Federation's managing director, also welcomed the improvements in construction.

"We will need a few more quarters of growth to say that for certain but with encouraging reports already in for the final quarter of 2013, and positive soundings on workload in 2014, it is fair to say that construction is bouncing back," he said.

However, there was less positive news for the business services and finance sector, which includes estate agents, solicitors firms and banks, where there was a 0.7% decline.

CBI Northern Ireland director Nigel Smyth said the figures confirmed that the recovery was gaining momentum, though many companies still faced challenging conditions.

"The Northern Ireland Executive must continue to focus on creating the right economic environment to build confidence, encourage investment and improve our competitiveness in order to secure the levels of growth required to make inroads into our high levels of economic inactivity and unemployment," he said.

Angela McGowan said she anticipated that improvements would continue for manufacturers.

"They are most probably anticipating rising export orders as the global and national economic environment continues to improve," the Danske Bank chief economist said.

"The fact that local production levels have seen this healthy rise in quarter three tells us that the overall recovery is not being driven solely by rising consumer spending."


The remarkable growth rate in the NI transport equipment sub-sector

Highlights of third quarter output indices

Ulster Bank economist, Richard Ramsey, gives quarter-on-quarter highlights of the Northern Ireland output indices for the third quarter of 2013.

Construction, services and industrial production all went up:

* 4.9% growth in the sector which includes hotels and restaurants, new car sales and retail

* 6.7% growth in the sector which includes IT, technology, postal services and freight and passenger transport represented a record high

* 0.7% decline in business services and finance

* 8.8% increase in transport equipment, which includes Wrightbus and Bombardier – its output is now up nearly 13% on its peak pre-downturn

* 4%-plus growth for food, drink and tobacco

* 4%-plus growth for pharmaceuticals

* 2.4% growth in construction output

Belfast Telegraph