Posted on Monday 23 June 2014 by Ulster Business
Angela McGowan, chief economist at Danske Bank
A better performance by the retail, manufacturing and the services sectors are driving a buoyant outlook for the Northern Ireland economy for the rest of the year, according to a new report from Danske Bank.
Its latest Quarterly Sectoral Forecast expects the economy here to grow by 2.4% in 2014 and by the same amount in 2015, as a more positive picture of the labour market appears, consumer confidence improves and more foreign direct investment announcements emerge.
Accounting for 28% of economic output, both retail and manufacturing are behind the bulk of the improved picture but the services sector is also punching above its weight.
Administration and support services - such as recruitment companies, rental agencies, security activities as well as administrative and office support - are set to grow by nearly 6 per cent this year and 4 per cent next year. Professional and scientific services - which include legal services, accountancy, advertising, architects and engineering firms - are forecast to grow by 4.3 per cent this year and 4 per cent in 2015.
Meanwhile, ICT, arts and recreation, manufacturing and construction are all forecast to grow by at least 3 per cent.
The sectors expected to grow by less than 1% in 2014 and 2015 are typically within the public sector – public administration, defence and education.
And because government austerity remains a priority, the public sector in Northern Ireland could shed nearly 2,400 jobs during 2014 and 2015.
And because wage inflation has remain subdued, few in Northern Ireland have witnessed an increase in disposable income.
“Households may feel a little cheated as the economic improvements are still not translating into rising earnings,” Chief economist Angela McGowan said. “However, it is anticipated that as the labour market improves and a number of sectors struggle with skill shortages, there should be some upward pressure on wage growth in the second half of this year.
However, a lot of comfort can however be taken from the fact that low inflation will support disposable incomes in the months ahead and rising confidence levels are propelling Northern Ireland’s private sector onto a positive upward growth trajectory. ”