Growth forecast for the Northern Ireland economy in 2022 lowered
The Northern Ireland economy expanded again in the third quarter of 2021 but the pace of growth slowed. Growth is also expected to have slowed in the fourth quarter as supply side issues continued and the emergence of the new Omicron coronavirus variant likely stifled activity in the consumer-focused sectors. The new coronavirus variant and the rise in positive Covid-19 case numbers have increased the likelihood of consumers behaving more cautiously at the beginning of 2022 and more people having to self-isolate is also likely to weigh on activity levels. In addition to this, high inflation and supply chain disruption are continuing to pose challenges for consumers and businesses. We now estimate that the Northern Ireland economy grew by 6.2% in 2021 and have revised our forecast for growth in 2022 down to around 4.0%.
The latest data from the Quarterly Employment Survey showed strong labour market growth in the third quarter of 2021, with the number of employee jobs rising by 1.0% over the three-month period to September. The timelier HMRC PAYE data also supports the view that the labour market is in a relatively strong position, with the number of payrolled employees in November 2021 rising at a monthly rate of 0.7%. As a result of this data, we have strengthened our labour market outlook and now estimate that the annual average number of employee jobs in Northern Ireland increased by 0.2% in 2021, and are forecasting further growth of around 1.4% in 2022. We are also forecasting that the unemployment rate in Northern Ireland will average around 3.9% in 2022, similar to our 3.8% estimate for 2021.
