Flash comment archive

  • UK inflation data: July 2018

    UK inflation data: July 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “Inflation in the UK increased for the first time since last November, rising from 2.4 per cent in June to 2.5 per cent in July.

    “One of the factors behind this rise was higher oil prices. Consumers will have felt the impact of this via higher prices at the pumps. The annual inflation rate for diesel increased from 12.6 per cent in June to 13.8 per cent in July. For petrol, there was an increase from 11.1 per cent to 11.7 per cent.

    “Higher oil prices also had an impact on manufacturing businesses with the rate of input price inflation rising for the fifth consecutive month. The current rate of 10.9 per cent is significantly higher than the 3.9 per cent observed in February. This increase in costs could work its way through the supply chain and put some upward pressure on consumer prices, slowing the gradual move in CPI inflation back towards the Bank of England’s 2 per cent target.

    “With inflation still relatively high, consumers’ purchasing power remains under pressure and, as a result, increases in household spending over the next few quarters are likely to remain modest.” 

    This comment was published in response to the July 2018 UK inflation data published by the ONS on 15th August 2018.


  • NI labour market data: Apr - Jun 2018

    NI labour market data: Apr - Jun 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “The Northern Ireland labour market softened slightly in April – June as the employment rate decreased and the unemployment rate rose from a record low in the previous quarter.

    “Despite the increase, the unemployment rate is still 1.5 percentage points lower than last year. The Northern Ireland unemployment rate has also been below the UK-wide rate for the last four quarters.

    “To really understand the performance of a labour market, it’s important to look at more than just the headline rate of unemployment. Northern Ireland still has the highest rate of economic inactivity across the twelve UK regions. The percentage of unemployed people who have been without a job for one year or more is 63.1 per cent in Northern Ireland, much higher than the 26.7 per cent observed for the whole UK.

    “The Northern Ireland labour market is in relatively good shape, but challenges such as these still need to be addressed.”

    This comment was published in response to the April – June 2018 Northern Ireland labour market data published by NISRA on 14th August 2018.


  • UK GDP data: 2018 Q2

    UK GDP data: 2018 Q2

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “The UK economy performed better in the second quarter of the year than it did in the first quarter, but we shouldn’t get too excited about this pickup in growth.

    “The quarterly rate of household spending growth remained relatively subdued as above-target inflation continued to exert some pressure on consumers’ spending power. And while business investment returned to positive growth after declining in the first quarter, Brexit-related uncertainty is still having a negative impact on businesses’ willingness to embark on new strategic investment projects.

    “Despite sterling remaining relatively weak, the data showed that exports fell sharply in the second quarter of the year and net trade made a negative contribution to GDP growth for the first time since 2016.

    “In short, the UK economy is still experiencing a period of positive, but modest, growth.”

    This comment was published in response to the UK GDP data released by the ONS on 10th August 2018.


  • UK interest rate announcement: August 2018

    UK interest rate announcement: August 2018

    Commenting on today’s announcement, Danske Bank Chief Economist Conor Lambe said:

    “As had been widely expected, the Bank of England’s Monetary Policy Committee (MPC) increased interest rates to 0.75 per cent today.

    “This marks the first time that interest rates in the UK have been higher than 0.5 per cent since March 2009.

    “However despite this rise, and the view that interest rates are unlikely to return to the levels they were at before the financial crisis anytime soon, monetary policy in the UK remains relatively supportive for most consumers and businesses.

    “The MPC continued to imply that future rises in interest rates are likely over the coming years. However, these increases are expected to occur only gradually.”

    This comment was published in response to the Monetary Policy Committee's UK interest rate announcement in August 2018. 


  • NI Composite Economic Index: 2018 Q1

    NI Composite Economic Index: 2018 Q1

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “Today’s data shows that economic output in Northern Ireland decreased in the first quarter of 2018 when compared with both the fourth quarter of last year and the first quarter of 2017.

    “Compared with the final quarter of 2017, services output increased at the start of this year. However, there was a decrease in output in the production sector and a particularly sharp fall in construction activity.

    “The overall decrease in output is likely to have been driven by a combination of factors. Despite beginning to recover gradually, household spending power remains under some pressure. Bad weather in the early part of the year is likely to have played a role, particularly in the fall in construction output. And the continued uncertainty around Brexit is dampening business investment.

    “Despite the fall in output estimated for the first quarter, the annual rate of economic growth in Northern Ireland for 2018 as a whole is expected to be positive. But with the challenges of constrained consumer spending power and Brexit-related uncertainty likely to persist, the performance of the local economy throughout this year is expected to be underwhelming.”     

    This comment was published in response to the 2018 Q1 Northern Ireland Composite Economic Index released by NISRA on 19th July 2018.


  • UK inflation data: June 2018

    UK inflation data: June 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “Despite there being no change in the headline inflation rate of 2.4 per cent, there was a sharp rise in the transport component of the CPI inflation measure. The annual inflation rate relating to transport prices increased from 4.7 per cent in May to 5.5 per cent in June. This was mainly driven by increases in petrol and diesel prices.

    “The rate of price increases did slow for food and non-alcoholic drinks and for clothing and footwear.

    “There are currently two opposing forces influencing the inflation rate. The impact of the post-referendum sterling depreciation is gradually fading, which is exerting downward pressure on the inflation rate. However, there is upward pressure coming from higher oil prices.

    “That being the case, the numbers could fluctuate a little over the next few months but the annual rate of inflation for 2018 as a whole is expected to be lower than observed last year.”  

    This comment was published in response to the June 2018 UK inflation data published by the ONS on 18th July 2018.


  • NI labour market data: Mar - May 2018

    NI labour market data: Mar - May 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “The latest Northern Ireland labour market data revealed some good news with the employment rate rising and the inactivity rate falling when compared with the previous quarter.

    “The male employment rate fell, but this was offset by a further rise in the female employment rate.

    “Looking across the different regions of the UK, Northern Ireland’s labour market sits near the ends of the spectrums. Despite being relatively high in a local context, Northern Ireland’s employment rate of 69.8 per cent is the lowest of the UK regions and the only rate to be below 70 per cent.

    “The local unemployment rate of 3.5 per cent is equal to that of the East and South East of England with only the South West enjoying a lower rate of unemployment (3.2 per cent) than these three regions.

    “But the long-standing challenge of high inactivity means that Northern Ireland’s economic inactivity rate remains the highest of all the UK regions.”

    This comment was published in response to the March – May 2018 Northern Ireland labour market data published by NISRA on 17th July 2018.


  • UK inflation data: April 2018

    UK inflation data: April 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “UK inflation fell again in April. The CPI rate declined from 2.5 per cent in March to 2.4 per cent in April.

    “After last week’s labour market data revealed a rise in the rate of regular pay growth for employees in Great Britain, today’s fall in inflation is a further sign that the squeeze on UK consumers is gradually easing.

    “But inflation has further to fall before it returns to the Bank of England’s 2 per cent target rate and real wage growth, while back in positive territory, remains modest. The data is moving in the right direction for consumers, but the pressure on household budgets remains a constraining factor on the prospects for both the UK and Northern Ireland economies.”

    This comment was published in response to the April 2018 UK inflation data published by the ONS on 23rd May 2018.

     

     


  • UK inflation data: March 2018

    UK inflation data: March 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “CPI inflation in the UK fell from 2.7 per cent in February to 2.5 per cent in March 2018.

    “This latest reading means that inflation is now at its lowest rate since March of last year and has fallen by 0.5 percentage points already in 2018.

    “For UK consumers, this fall in inflation is the second bit of good news in as many days as the latest labour market data showed a rise in the rate of wage growth. These two data releases reinforce the view that, going forward, the consumer squeeze is likely to ease gradually.

    “But we shouldn’t lose sight of the fact that inflation is still above the Bank of England’s target and wage growth remains below its pre-financial crisis average. Consumers are unlikely to loosen their purse strings too much over the next couple of months.”

    This comment was published in response to the March 2018 UK inflation data published by the ONS on 18th April 2018.


  • NI labour market data: Dec - Feb 2018

    NI labour market data: Dec - Feb 2018

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

    “The latest Northern Ireland labour market data contained some positive signs. The employment rate increased over the quarter and over the year while the unemployment rate fell.

    “At 27.9 per cent, the economic inactivity rate is still too high and above what it was a year ago. It did decrease over the quarter which is encouraging to see, but there is still substantial room for improvement on this particular measure of the local labour market.

    “In Great Britain, wages increased by 2.8 per cent over the year to December – February 2018 – above the current rate of inflation. With real wage growth now back in positive territory, it seems likely that the Bank of England’s Monetary Policy Committee will go ahead and increase interest rates at their next meeting on 10th May.”

    This comment was published in response to the December – February 2018 Northern Ireland labour market data published by NISRA, and the UK labour market data published by the ONS, on 17th April 2018.


  • One year to Brexit

    One year to Brexit

    Commenting on it being only one year until the UK leaves the EU, Danske Bank Chief Economist Conor Lambe said:

    “It is now just one year until the United Kingdom leaves the European Union and, despite the progress that has been made to date, there is a significant amount of work still to do before Britain is Brexit-ready.

    “There is still no agreed solution on how a hard border will be avoided between Northern Ireland and the Republic of Ireland. With maintaining membership of the EU customs union – which would have gone part of the way to solving the problem – ruled out by the UK Government, other solutions will need to be identified. Most of the focus of the discussions related to Northern Ireland that will take place over the coming weeks is likely to be placed on the ‘backstop’ option. This could see Northern Ireland maintain very close links to the EU in the absence of an alternative way to avoid a hard border. But the UK Government is hopeful that it will find a solution to the border challenge during the detailed trade talks and that the ‘backstop’ won’t be needed.

    “The future trade deal is arguably the most important aspect of this negotiation. But there will not be enough time between now and the autumn, when the withdrawal treaty needs to be agreed, to finalise a full and comprehensive free trade agreement. Therefore, the discussions will have to continue during the transition period. Based on the time taken to conclude past trade deals, even with the additional 21 months that the transition period provides, the timeline is still very tight. And that’s not including the time that may be needed for the Government and businesses to have the processes in place to ensure they are ready for the agreement coming into force.

    “With a year left to run until Brexit day, the chances of a no deal scenario coming to fruition in 12 months are now less than they were just a few months ago. But unfortunately, they are not yet zero.

    “Businesses are still facing a cloud of uncertainty when it comes to their future long-term access to EU markets. While the progress made recently is welcome, the UK Government must keep up the pace in the negotiations. There is no time to lose.”


  • NI labour market data: Oct - Dec 2017

    NI labour market data: Oct - Dec 2017

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

     

    “The Northern Ireland labour market data for October – December 2017 showed that, over the quarter, the three main data points moved in the right direction. The employment rate increased while the unemployment rate and economic inactivity rate both fell.

     

    “However, over the year, it was a much bleaker picture. As has been the case for some time now, the main takeaway was the sharp increase in economic inactivity. The inactivity rate currently stands at 28.4 per cent – 2.3 percentage points higher than a year ago.

     

    “Northern Ireland’s high rate of economic inactivity is a long-standing problem and it can’t be solved overnight. Tackling the issue will require a concentrated effort from both government and businesses. But this will be difficult to achieve in the absence of the devolved institutions and is another point to add to an already long list of why it was so disappointing to see the political talks collapse last week.”

     

    This comment was published in response to the October – December 2017 Northern Ireland labour market data published by NISRA on 21st February 2018.

  • Preliminary 2017 Q4 UK GDP data

    Preliminary 2017 Q4 UK GDP data

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

     “In the last quarter of 2017 UK GDP increased by 0.5 per cent, up from 0.4 per cent in the third quarter of the year.

    “This means that the annual rate of GDP growth in the UK was 1.8 per cent in 2017, which represents a slight fall compared with the growth rate in 2016.

    “One factor that contributed to the modest growth in GDP last year was the squeeze on household spending brought about by the sharp rise in prices. With wage growth failing to keep up with inflation, consumers were more cautious with their spending.

    “Another contributing factor was the negative impact that Brexit-related uncertainty had on business investment.

    “Looking ahead, 2018 is unlikely to see a significant turnaround in fortunes. The consumer squeeze is likely to fade a little, but this is expected to occur gradually. As such, household spending power is likely to remain under some pressure. With uncertainty around Brexit also expected to persist, business investment is unlikely to ‘take off’ over the next twelve months. Danske Bank are forecasting that UK GDP will grow by 1.5 per cent in 2018.”

    This comment was published in response to the preliminary UK GDP data released by the ONS on 26th January 2018.

  • NI labour market data: Sep - Nov 2017

    NI labour market data: Sep - Nov 2017

    Commenting on the latest figures, Danske Bank Chief Economist Conor Lambe said:

     “Today’s labour market data for September – November 2017 showed that, over the quarter, the unemployment rate in Northern Ireland fell to 3.8 per cent. The inactivity rate also increased slightly but it was encouraging to see a rise in the employment rate.

    “However, when compared with a year ago, the data is less positive. The unemployment rate was lower than in the previous year. But the employment rate fell compared to the same period in 2016 and the inactivity rate increased.

    “Looking forward, we think that the economy will add more jobs in the year ahead, but we expect the average rate of employee jobs growth in 2018 to be lower than in 2017.

    “We also expect the average unemployment rate in 2017 to be around 4.7 per cent and to fall to 4.1 per cent in 2018, both significantly lower than the 5.8 per cent observed in 2016. However, the recent increases in Northern Ireland’s economic inactivity rate means that this expected fall in the annual unemployment rate is not as positive as it might have first appeared.”

    This comment was published in response to the September – November 2017 Northern Ireland labour market data published by NISRA on 24th January 2018.

  • UK inflation data December 2017

    UK inflation data December 2017

    Commenting on the figures, Danske Bank Economist Conor Lambe said:

    “The CPI inflation rate in the UK fell slightly from 3.1 per cent in November to 3 per cent in December.

    “After starting 2017 at a little under the Bank of England’s target of 2 per cent, inflation in the UK ended the year one percentage point above the target rate.

    “The increase between the first and last months of the year was mainly a consequence of the sharp depreciation in sterling that followed the Brexit vote. For consumers in Northern Ireland and the rest of the UK, the squeeze on spending power throughout 2017 which was brought about by this rise in inflation, has probably been the most direct and recognisable impact of the UK’s decision to leave the EU so far.”

    This comment was published in response to the December 2017 UK inflation data published by the ONS on 16th January 2018

  • NI labour market data: Aug - Oct 2017

    NI labour market data: Aug - Oct 2017

    Commenting on the figures, Danske Bank Economist Conor Lambe said:

    “The latest labour market data shows that the unemployment rate in Northern Ireland has now fallen to 3.9 per cent, lower than the UK rate of 4.3 per cent.

    “However, on other indicators, the comparison with the wider UK economy makes for more unpleasant reading. The 68.1 per cent employment rate in Northern Ireland is still considerably below the UK rate of 75.1 per cent and is also the lowest employment rate across all the UK regions.

    “Northern Ireland’s inactivity rate of 29.0 per cent is considerably above the 21.5 per cent observed across the UK as a whole. It is the highest of the twelve UK regions.

    “The data published today showed a relatively sharp increase in Northern Ireland’s inactivity rate. Given that unemployment fell but employment also came down, it is likely that some people who had previously been without a job but searching for one, stopped looking for work and moved into the economically inactive category.

    “Looking at the economically inactive people who are of working age, 18 per cent or around 61,000 people, would like to work. Finding ways to successfully help this relatively large group of people to find a job is not a simple task – the fact that Northern Ireland has had a high rate of inactivity for some time proves that point – but it should be a key aim of policymakers in the years ahead.”

    This comment was published in response to the August - October 2017 Northern Ireland labour market data published by NISRA on 13th December 2017.

  • UK interest rate announcement: November 2017

    UK interest rate announcement: November 2017

    Commenting on today’s announcement, Danske Bank Economist Conor Lambe said:

    “The Bank of England’s Monetary Policy Committee (MPC) announced an increase in the UK interest rate to 0.5 per cent today.

    “This was the first increase since 2007 and it sees interest rates return to where they were from March 2009 until August last year, when the MPC cut rates in response to the UK’s vote to leave the European Union.

    “On its own, today’s increase is likely to have only a modest impact on most individuals and families. On the borrowing side, looking at the housing market, many mortgage holders are now on fixed rates and so the interest they pay on their borrowing won’t change immediately. But variable rate mortgage holders will likely see a slight rise in their monthly mortgage payments. For savers, they may see an increase on the rate paid on their deposits.

    “However, for both savers and borrowers, an interest rate of 0.5 per cent still represents a low rate compared with long-term historic trends.

    “Looking forward, the MPC has made it clear that any further rises in interest rates will take place at a gradual pace.”

    This comment was published in response to the Monetary Policy Committee's UK interest rate announcement in November 2017.

  • Preliminary 2017 Q3 UK GDP data

    Preliminary 2017 Q3 UK GDP data

    Commenting on the figures, Danske Bank Economist Conor Lambe said:
    "Quarterly economic growth was estimated to have picked up slightly from 0.3 per cent in the first two quarters of the year, to 0.4 per cent in the third quarter.

    "Both the services sector and the manufacturing sector experienced a rise in output, but the construction sector contracted for the second quarter in succession.

    "Despite the slight uptick, real GDP growth in the UK remains a bit below its historic average as the economy continues to feel the effects of a squeeze on consumers and heightened uncertainty levels due to Brexit. Both of these factors are expected to continue weighing down on growth over the rest of this year and into 2018."
    This comment was published in response to the preliminary UK GDP data released by the ONS on 25th October 2017.

  • UK inflation data: November 2017

    UK inflation data: November 2017

    Commenting on the figures, Danske Bank Economist Conor Lambe said:

    “CPI inflation in the UK increased from 3.0 per cent in October to 3.1 per cent in November. This is the highest inflation rate since March 2012.“Over the past twelve months, inflation has increased sharply – in November 2016, it stood at 1.2 per cent. This rise has taken its toll on consumers this year as wage increases have not kept pace with the rate of price rises.“Looking forward, inflation is not expected to rise too much higher than its current rate.

    But with the rate of price growth still above the rate of wage growth, the consumer squeeze is likely to continue holding back economic growth in Northern Ireland and the rest of the UK as we move into the new year.”

    This comment was published in response to the November 2017 UK inflation data published by the ONS on 12th December 2017.

  • NI Composite Economic Index 2017 Q2

    NI Composite Economic Index 2017 Q2

    Commenting on the figures, Danske Bank Economist Conor Lambe said:

    “The Northern Ireland Composite Economic Index experienced a fall over the quarter to 2017 Q2, with output estimated to have fallen in the production, services and public sectors. Construction was the one bright spot, experiencing relatively strong growth in the second quarter of the year.

    “Comparing the data with the same period last year makes for slightly better reading. The Composite Economic Index suggests output increased in the second quarter of 2017 relative to the second quarter of 2016, but the pace of growth was modest.

    “The drivers behind the slowdown in the Northern Ireland economy are the same as those affecting the rest of the UK – a consumer squeeze brought about by high inflation and Brexit-related uncertainty weighing down on business investment.

    “Looking out over the rest of this year and into next year, we expect the Northern Ireland economy to grow by 1.2 per cent in 2017 and by 1.0 per cent in 2018.”

    This comment was published in response to the 2017 Q2 Northern Ireland Composite Economic Index released by NISRA on 26th October 2017.

  • NI labour market data: Jul - Sep 2017

    NI labour market data: Jul - Sep 2017

    Commenting on the figures, Danske Bank Economist Conor Lambe said:

    “Today’s labour market data revealed that the unemployment rate in Northern Ireland fell sharply to 4 per cent over the July – September period, but this was accompanied by a decrease in the employment rate and a large rise in the inactivity rate.

    “Broadly speaking, this implies that rather than the unemployment rate coming down as people move into work, people seem to be moving from being unemployed to being economically inactive.

    “A high rate of economic inactivity is a long standing challenge in Northern Ireland. The current inactivity rate is the highest since April – June 2010, is the highest of the twelve UK regions and, at 28.9 per cent, is more than seven percentage points above the rate for the UK as a whole.”

    This comment was published in response to the July - September 2017 Northern Ireland labour market data published by NISRA on 15th November 2017.