THE first official measure of the Northern Ireland economy has revealed the biggest quarterly decline in the services sector since records began in 2005.
Despite the impact of the lockdown only coming at the tail end of the first quarter (Q1) in late March, the services sector still took a 4.2 per cent hit, quarter-on-quarter, taking the index back to its lowest point since the start of 2016.
Output in the production sector, which includes manufacturing and energy, fell by 3.2 per cent over the same quarter.
While economic output is expected to fall off a cliff edge in the second quarter, the Northern Ireland Statistics and Research Agency (NISRA) showed that Northern Ireland experienced a much greater impact from coronavirus in Q1 than the average decline reported for the whole of the UK (-1.9 per cent).
The north’s services output in Q1 was 6.7 per cent below the record high point of Q4 2006.
Within the north’s broad services sector, the business services and finance sector was down 7.6 per cent over the quarter and 9.2 per cent over the year, effectively wiping out four years of growth.
Ulster Bank chief economist Richard Ramsey said the slump was the largest decline since the 13.8 per cent drop in Q4 2008 following the global financial crisis.
The same sector experienced just a 0.5 per cent fall across the UK in Q1 2020.
The north’s largest services sector, wholesale, retail, food and accommodation, posted a decline of 2.6 per cent, its biggest drop since 2010.
‘Other services’, which includes many close contact retailers and beauty businesses, saw an 8.8 per cent Q1 decline.
According to Richard Ramsey, it takes activity in that sector back almost 13 years to Q2 2007.
The Index of Production (IOP) for the north during Q1 showed it down 3.2 per cent over the quarter and 4.7 per cent over the year, rolling it back to Q3 2017 levels.
The rates of decline were steeper than the UK average, but not as marked as the services sector.
Manufacturing as a whole was down 3.1 per cent, with textiles (-6.5 per cent) and engineering (six per cent) particularly badly hit.
However, the projections by Ulster University’s Economic Policy Centre anticipate manufacturing to take a 55 per cent hit in the second quarter.
The same report forecasts that output in hospitality will fall by 85 per cent in Q2, with construction slumping by 70 per cent.
