Second record high for Northern Ireland employment rate but future depends on Brexit

Northern Ireland’s employment rate has hit a record high for the second quarter in a row.

The latest Labour Force Survey, which reviews data from April to June, shows an increase of 3.3% to 72.6% compared to the same period in 2018.

However despite two quarters of consecutive record highs, Northern Ireland’s employment rate remains below the UK average of 76.1%, which is the joint highest rate on record.  

And, while Northern Ireland’s economic inactivity rate, at 25.5%,  is now the lowest on record, it remains well above the UK average of 20.7%, despite having declined by 2.2 percentage points over the past year.

However, local unemployment saw a marginal increase of 0.2 percentage points relative to Q1 of 2019  though it is 0.6pps lower than the same period in 2018.

Martin Cowie, Partner at PwC NI, commented:

“While the trend of increased employment and falling economic inactivity is encouraging, this comes at a time when the UK economy is experiencing considerable turbulence.

“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 31st October. 

“The labour market remains highly dependent on what occurs over the next few weeks. Northern Ireland has the second lowest employment rate and highest inactivity rate of all UK regions. 

“Should the UK leave the EU with a deal, it will be positive for workers with local businesses able to move forward with investment plans. This would increase demand for labour which in turn would have a positive impact on wages.

“However if the UK leaves without a deal, the economy may receive a negative shock resulting in a range of other less positive outcomes for workers.”

Turning to the wider UK performance, PwC chief economist John Hawkswortth said there were increasing signs that the tight labour market is feeding through to higher earnings:

“Regular weekly pay growth picked up to almost 4% in the second quarter - the highest growth rate since before the financial crisis. This will continue to support consumer spending, which has been the main thing keeping the UK economy afloat over the past six months in the face of ongoing Brexit-related uncertainty and a slowing global economy.

“The flip-side of strong jobs growth, however, is that productivity growth remains very weak. Output per hour was down by 0.6% in the second quarter of 2019 compared to the same quarter in 2018. Weak productivity growth reflects subdued corporate investment growth over the past three years as businesses wait for greater clarity on Brexit."


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