Belfast Telegraph

Record employment creating false sense of security, warns Ulster Bank's chief economist

Ulster Bank chief economist Richard Ramsey
Ulster Bank chief economist Richard Ramsey
Margaret Canning

By Margaret Canning

The economy remains on a "knife-edge" despite employment in Northern Ireland increasing to a record rate of 72.2%, it has been claimed.

The Labour Force Survey said the unemployment rate for April to June was 3.1%, which was up 0.2 percentage points over the quarter but down by 0.6 percentage points over the year.

The unemployment rate here remains below the UK rate of 3.9%, the Republic's rate of 4.5% and the EU jobless rate of 6.3%.

The employment rate increased over the quarter by 0.9 percentage points and over the year by 2.6 percentage points to 72.2%, the report by Northern Ireland Statistics and Research Agency said.

At 25.5%, the economic inactivity rate, which counts those who are neither in work nor looking for work, was the lowest rate on record for Northern Ireland, but it was still the highest of the 12 UK regions.

UK-wide, the average rate of economic inactivity is 20.7%.

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However, Ulster Bank chief economist Richard Ramsey said that the survey was lagging behind other economic indicators.

This week, the bank's Purchasing Managers' Index reported the sixth month in a row of falling orders for firms, while last week GDP figures for the UK showed a contraction of 0.2% in the second quarter.

Mr Ramsey said: "Employment growth remained robust. However, the labour market is a lagging indicator of economic conditions.

"In recent months there has been a marked deterioration in business conditions.

"Furthermore, the economic outlook from both a Brexit and global perspective has darkened. In time this will filter into the labour market."

He said there were "tentative signs" of a weakening in the labour market, including growth in the unemployment rate from 2.9% in the first quarter to 3.1%.

Martin Cowie, partner at PwC, said the UK economy was experiencing "considerable turbulence" despite the positive employment statistics.

He added: "The ongoing Brexit-related uncertainty continues to stall business investment, and combined with the economy shrinking in the second quarter of the year, as well as a weakening global economy, we're left on a knife-edge ahead of October 31."

Danske Bank chief economist Conor Lambe said the data painted a relatively positive picture. He added: "The threat of leaving the EU without a deal at the end of October remains the most significant risk facing the Northern Ireland economy.

"If we are to build on the recent strong performance of the labour market, it's vital that a no-deal Brexit is avoided."

Belfast Telegraph