Official figures indicate that Northern Ireland economy experienced growth during the third quarter of 2024, signalling a positive shift in the region’s economic landscape. The services sector, which constitutes the largest part of the economy, demonstrated notable resilience, with output increasing by 1.1% compared to the previous quarter.
The primary driver behind this growth was a recovery in both the retail and hospitality sectors, which reported a robust quarterly growth rate of 2%. This upturn in consumer spending suggests an improvement in household finances, potentially influenced by a decline in inflation rates.
Manufacturing, which has struggled in recent years, also showed signs of recovery, achieving its best quarterly growth since early 2021. Output in this sector increased by 1.6% over the quarter and rose by 1.3% when compared to the same period last year. This positive trend is particularly significant given the sector’s previous stagnation, which was exacerbated by challenges such as high energy costs, supply chain disruptions, and skills shortages. Earlier in the year, Terex, one of the region’s major manufacturing employers, implemented redundancies and other cost-cutting measures in response to these ongoing difficulties.
Despite the overall growth, the services sector is not without its challenges. Business services, which encompass accountancy and consulting, recorded a decline of 1.4% in the third quarter. This downturn may indicate reduced activity levels at several large consultancy firms, highlighting the uneven recovery within the broader services sector. However, it is important to note that this sector has seen steady growth since the pandemic, with output now nearly 11% higher than pre-pandemic levels at the end of 2019.
In contrast to the challenges faced by the manufacturing sector, the consumer services segment performed exceptionally well, with retail sales increasing by almost 3% in the third quarter and up by 5% year-on-year. This growth reflects a renewed consumer confidence as households begin to navigate an improving economic environment.
The recent data underscores a cautious optimism regarding Northern Ireland’s economic trajectory. While challenges remain, particularly within the manufacturing sector, the growth observed in services and retail indicates a potential turning point. As inflation rates ease, consumers appear to be regaining confidence, which could further stimulate economic activity in the coming months.
Overall, the signs of growth in both the services and manufacturing sectors paint a hopeful picture for Northern Ireland’s economy as it continues to recover from the impacts of the pandemic. Policymakers will need to focus on fostering this momentum, addressing ongoing challenges, and supporting sectors that may still be struggling to find their footing.
