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Northern Ireland’s services sector grew strongly in the first quarter of this year, official data suggests.

Services is the dominant part of the local economy, covering a broad swathe of activity including retail, hospitality and business services.

Output expanded by 1.9% over the quarter and was 2.9% higher compared to the same period in 2023.

The figures also suggest that consumer services like retail and hospitality may be seeing the start of a recovery after a difficult period of high inflation.

The broad retail and hospitality sector saw output expand by 2.2% over the quarter, the best quarterly performance since the middle of 2021.

Output in this sector has been essentially flat for much of the past two years as consumer spending has been squeezed by rising prices.

The rate of price rises has slowed with the UK’s main rate of inflation now at about 2% having been as high as 11.1% in the autumn of 2022.

Business services which includes things like things like law, accountancy and management consulting also continued to grow at the start of this year.

Output in that sector was at a ten year high and has expanded by more than 30% since its pre-pandemic level at the end of 2019.

The strong performance may reflect the work that Northern Ireland-based staff do for UK and international customers.

Difficult period for manufacturing

By contrast the figures suggest that a difficult period for the local manufacturing sector is continuing.

Output across manufacturing fell by 0.4% over the quarter and was down by 3.7% compared to the same period last year.

Manufacturing output was flat for much of 2022 and has been falling since the start of last year.

There is significant variation between manufacturing subsectors.

For example the transport equipment subsector saw output jump by more than 9% over the quarter and by 35% over the year.

That likely reflects the strong performance of Wrightbus and the continued recovery of the aerospace sector.