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16 April 2014

UK average weekly earnings finally catch up with inflation

Finally, after nearly six years of declining real incomes, average weekly earnings finally overtook inflation, according to official data from the Office for National Statistics (ONS).

Weekly wages were up 1.7% in February while official ONS data yesterday showed that consumer price inflation (CPI) had fallen for the sixth month in succession to 1.6 per cent.

Other than for two months in 2010, this is the first time in six years that earnings have outpaced inflation.

The inflation rate of 1.6% relates to the 12 months to March 2014 while the 1.7% rise in average earnings, includes bonuses and is the annualised rate recorded between December and February.

In a raft of economic data released today, there was more good news for Northern Ireland as claimant count unemployment fell by 700 in March taking the total decline in the claimant count total to 7,500 over the last 12 months.

Dr Esmond Birnie PwC chief economist in Northern Ireland says:

“That makes 14 consecutive months of declining Northern Ireland unemployment, the most sustained fall since 2000, although the jobless total still remains above the UK average and the rate of decline has been much slower than in the rest of the UK.

The wages and inflation trends suggest that the squeeze on household real incomes is coming to an end, although it will be some years before the losses suffered since the recession are made up for most workers.

“Also out today were fourth quarter results for 2013 from the Northern Ireland Statistics and Research Agency’s (NISRA) Composite Economic Index, which suggests that economic activity increased by 0.6% over the quarter in real terms.

“The Index was up 2.6% over the year and suggests that the local economy has returned to levels of Q4 2010, almost matching the overall UK recovery, although there are still some doubts over the extent to which the index reflects real GDP performance

 “During 2013 and thus far in 2014 we have seen sustained levels of inward investment and there is every indication that Northern Ireland remains a competitive and attractive location for foreign direct investment, both relative to other UK regions and the rest of the EU

“One sector which still seems to be facing challenging times is construction according to more data out today.

“Notwithstanding indications of house price recovery, construction output in Northern Ireland in the final quarter of 2013 decreased by 3.7% compared to Q3 2013 and was 7.6% lower compared than in same quarter in 2012.

“That is particularly worrying, given the thousands of bobs already lost in the sector.

“Nonetheless, after yesterday’s inflation data, this was a second day of good economic news for Northern Ireland.”

Ends.

Contact details

Email: Esmond Birnie

Tel: +44 (0)28 9041 5808