Official statistics press release - new experimental Northern Ireland Composite Economic Index
Results from the first experimental Northern Ireland Composite Economic Index (NICEI) were published today by the Northern Ireland Statistics and Research Agency (NISRA).
~ Thursday, 31 January 2013
The NICEI is a new experimental quarterly measure of the performance of the Northern Ireland economy based on available official statistics. It is not possible to provide a comprehensive measure of quarterly Gross Domestic Product for NI due to the lack of suitable data sources. Comparisons with UK GDP measures are therefore approximate. However, the NICEI provides an appropriate short term indicator for the NI economy in advance of more complete figures from other sources such as annual Regional Accounts information for NI from ONS.
The index has been developed using data from existing quarterly indices of output from the Production, Services and Construction sectors including results published on 23rd January. These sources have been combined (on the basis of industry share of Gross Value Added) with Agricultural output data and employee jobs data for the Public sector to provide a seasonally adjusted and deflated measure of change in economic activity.
Full results can be found at DETI Website
Economic activity has risen in three of the last four quarters but is still close to the minimum level reached in Q2 2012
1. The NICEI results covering the period July - September 2012 estimate that NI economic activity increased by 0.7% over the quarter to 96.5 in Q3 2012.
2. The index has risen in three of the last four quarters with an annual rise of 0.3% over the year. The NICEI has returned to levels previously recorded in Q4 2003.
Economic activity peaked in Q2 2007
3. After reaching this maximum value in Q2 2007, the Composite Index then first reported two successive quarterly falls in overall levels of Northern Ireland economic activity in Q4 2007.
4. The index has been on a downward trend since, falling in sixteen out of the last twenty-one quarters and overall it has fallen by 11.4% to Q3 2012.
Comparison with the UK
5. Although not strictly equivalent, comparison with GDP for the UK shows that the NI economy reported two successive quarterly declines in output earlier (Q4 2007) than the UK (Q3 2008).
6. The NI measure is currently close to its minimum reached in quarter Q2 2012 while GDP in the UK has shown some recovery from the minimum level reached in Q2 2009.
7. GDP in the UK was still 2.9% below its peak value (Q1 2008) in Q3 2012.
Private Sector performance
8. Results for the NI Private sector show a similar pattern to that for the whole economy. Here the index rose by 1.0% to 97.0 in Q3 2012, but is currently still 14.1% below the maximum value of 113.0 reached in Q2 2007.
9. Since reaching this maximum value the index has fallen in fourteen out of twenty-one quarters. The index fell by a total of 14.9% from its maximum to minimum value of 96.1 in Q2 2012.
Public Sector performance
10. The Public sector (employee jobs) index initially showed more resilience to the general downturn in the economy than the Private sector index, but has been on a downward trend since Q3 2009. The index fell by 0.1% to 94.9 in Q3 2012, the lowest level since reaching its maximum value in Q3 2009.
11. The index fell by 5.3% from its maximum value of 100.2 to the minimum value of 94.9 in Q3 2012.
12. The NICEI series reached its peak value (Q2 2007) three quarters before the UK GDP series (Q1 2008). The rate of increase in Northern Ireland output to Q2 2007 was also more marked than in the UK as a whole and the duration of the downturn has been more protracted. It should be noted though that there have been 3 quarter on quarter increases out of the last 4 quarters in the NI series, providing some indication of a return to growth over the year (0.3% growth to Q3 2012 compared to Q3 2011).
13. The Quarterly Employment Survey indicate that the first growth in employee jobs occurred in Q2 2012 with a quarterly increase of 0.2%, and a further marginal increase (0.04% or 260 jobs) in Q3 2012. The growth in employee jobs started two quarters later than the return to growth in output, but both series suggest that the return to growth is not particularly marked.
14. It is also important to place the current levels of economic activity in an earlier context, prior to the rapid growth that occurred leading up to Q2 2007. NI output (NICEI) has returned to levels recorded in Q4 2003 and employee jobs to levels last recorded in Q4 2004.
For full details of the methodology used please see the Methodology Report at DETI Website
Together the existing IOS, IOP and IOC indices cover their respective elements of the private sector economy. Output data currently provided by DARD on an annual basis was used as the agricultural input. No appropriate output data for the Public sector is collected in Northern Ireland and as a best available proxy Public sector employment from the Quarterly Employment Survey (QES) was used.
Weighting and Combining the Data
The output series were produced as weighted aggregates of the above input series, where the weights were based on private sector Gross Value Added (GVA) by industry obtained for Northern Ireland from Regional Accounts produced by ONS.
Please note that the latest available GVA by industry published in December 2012 refers to the year 2010 (although total GVA is available for the following year 2011).
Annual chain-linking was used to combine the private Services, Production, Construction and Agriculture sectors to produce an index for the Private sector, which was then combined with the index for the Public sector to give an overall index for the economy. Use of annual chain-linking is standard National Accounts practice.
Seasonal Adjustment of the Indices
The indirect method of seasonal adjustment was employed. Seasonally adjusted figures were input (where possible) and when the combined output series were tested for seasonality there was no residual seasonality found, therefore no seasonal adjustment was required.
Notes to editors:
- For media enquiries please contact DETI Press Office on 028 9052 9604. Outside office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.