Warning as new report casts doubt on recovery
Report has cast doubt on both the robustness of Northern Ireland's incipient economic recovery and the depth of its decline.
The Northern Ireland update from Capital Economics in London said business activity could drop back in September, despite a strong rally in July's purchasing manager's index, a monthly report carried out on behalf of Ulster Bank.
Capital Economics' Nigel Holt said: "Although the July rise in the PMI activity index was indeed impressive – up from 49.8 in June to 56.1, while the UK index rose less sharply from 56.6 to 59.8 – there is a good chance that September will see a falling back.
"That is what happened in May and June of last year, for example."
He also challenged the view that there had been five-and-a-half years of steady decline in the Northern Ireland economy, because employment numbers had risen at that time.
The regional economist said: "2012 was pretty tough but overall, the economy hasn't been declining absolutely every year.
"It has been behind the UK but hasn't declined every year, and the most obvious indicator is what's happening to employment on the basis of the Labour Force Survey."
Those figures – and other indicators such as the housing market – suggested instead that the economy was "stuck and failing to grow," he argued.
The number of people in employment in Northern Ireland did grow from 744,000 in April to June 2009 to 804,000 in 2011 – before falling back to 797,000 this year. And while the unemployment rate had fallen from April to June to 7.5% – below the UK rate of 7.8% – Northern Ireland's high level of economic inactivity remained a concern, he said.
"A high proportion of people of working age in Northern Ireland are not looking for work, never mind in employment," he said.
And he said there was also concern over business births and deaths, with a business birth rate of 6.5% and a death rate of 8.6% in 2011, according to statistics from the Office of National Statistics released this month.
Overall, however, the July PMI figures were showing that "the broader recovery is now feeding through".
Referring to the long-running campaign to reduce corporation tax in Northern Ireland to match that in the Republic, Mr Holt said: "To get a big impact you really need to push it down a long way and I don't think that's realistic, even without the Scottish question."
The issue of corporation tax has been parked by the UK government until the outcome of a referendum on Scottish independence next year.
The unemployment rate in Northern Ireland from April to June