Northern Ireland Economy Reaches New Series High as Output Grows 1% in Second Quarter of 2026
Northern Ireland's economy has reached a new series high after growing by 1.0 per cent in real terms in the second quarter of 2026, according to figures published by the Northern Ireland Statistics and Research Agency on September 24. The Northern Ireland Composite Economic Index for Q2 2026 shows that the region's output is now 12.7 per cent above its pre-pandemic level in the fourth quarter of 2019, with both the services and production sectors recording growth and payrolled employment rising to 819,200 in August.
Background
The Northern Ireland Composite Economic Index, published quarterly by NISRA, is the most comprehensive measure of the region's economic performance, drawing on data from the services, production, retail, and construction sectors. The index has been tracking Northern Ireland's recovery from the pandemic-era contraction since 2020, and the Q2 2026 figures represent the strongest position the region has occupied since the series began. The data is published with a lag of approximately three months, meaning the figures released this week reflect economic activity between April and June 2026.
Northern Ireland's economic trajectory over the past two years has been shaped by a combination of factors, including the resolution of the Windsor Framework dispute, which removed some of the uncertainty that had weighed on business investment, and the continued growth of the technology and professional services sectors in Belfast. The region has also benefited from significant public investment in infrastructure, including the ongoing development of the Belfast Harbour estate and the expansion of Ulster University's Belfast campus, which has attracted research funding and private sector partnerships.
The labour market data, published separately by NISRA on September 15, provides additional context for the economic picture. The number of payrolled employees in August 2026 stood at 819,200, an annual increase of 0.8 per cent, while median monthly pay reached £2,509 — an annual increase of £133, or 5.6 per cent. The employment rate for those aged 16 to 64 was 72.2 per cent, and the seasonally adjusted unemployment rate for the period May to July 2026 was 2.4 per cent.
Key Developments
The services sector, which accounts for the largest share of Northern Ireland's economic output, grew by 0.8 per cent over the quarter and 0.7 per cent over the year, reaching a new series high. The production sector recorded even stronger growth, rising by 2.9 per cent over the quarter and 7.8 per cent over the year, also reaching a new series high. Within production, manufacturing grew by 2.9 per cent, electricity, gas, steam, and air conditioning supply by 2.3 per cent, and water supply and waste management by 6.5 per cent. The retail sector was the one area of weakness, recording a quarterly decrease of 1.0 per cent and an annual decrease of 2.0 per cent, reflecting the continued pressure on consumer spending from elevated living costs.
Economy Minister Dr Caoimhe Archibald welcomed the figures, highlighting several specific investments announced in late September, including a £700,000 workforce upskilling project by glass manufacturer Encirc in Fermanagh and a £10 million investment by timber distributor James Latham in County Antrim. The Department for Communities also announced a £2 million funding package for sports clubs across the region, while the Department for the Economy confirmed that approximately 860,000 households would receive a £63 cost-of-living support discount. Annual confirmed redundancies stood at 1,360, more than 44 per cent lower than the previous year.
Why It Matters
The new series high is a genuinely significant milestone for an economy that has faced a decade of political uncertainty, from the collapse of the Stormont Executive in 2017 to the Brexit-related disruption of the Windsor Framework negotiations. The fact that Northern Ireland's output is now 12.7 per cent above its pre-pandemic level compares favourably with the UK average and reflects the resilience of the region's services and manufacturing base. The 7.8 per cent annual growth in the production sector is particularly striking, suggesting that Northern Ireland's manufacturing firms — many of them in the agri-food, engineering, and advanced manufacturing sectors — are performing strongly despite the headwinds of rising input costs and global supply chain pressures.
The labour market data tells a similarly positive story. A median monthly pay of £2,509 represents a real-terms increase for many workers, though it remains below the UK average and significantly below the Republic of Ireland's equivalent figure. The gap in living standards between Northern Ireland and the Republic continues to narrow, but it remains substantial, and the ongoing Stormont budget deadlock — with the Executive still unable to agree a budget for 2026-27 — poses a real risk to the public services that underpin economic participation, particularly in health and education.
Local Impact
The economic growth is being felt unevenly across the region. Belfast city centre continues to attract the bulk of private sector investment, with the Titanic Quarter, the Cathedral Quarter, and the emerging Tribeca development all recording strong activity. Outside the capital, the picture is more mixed. Derry and the north-west have benefited from Ulster University's Magee campus expansion and the growth of the city's technology sector, but rural areas in Fermanagh, Tyrone, and south Armagh continue to face structural challenges around connectivity, skills, and access to finance. The Encirc investment in Fermanagh and the James Latham investment in Antrim are welcome, but they represent individual decisions rather than a systematic approach to regional rebalancing. The Department for the Economy's forthcoming economic strategy, expected before the end of 2026, will need to address this geographic imbalance if the headline growth figures are to translate into broadly shared prosperity.
What's Next
NISRA will publish the Q3 2026 Composite Economic Index in December, which will provide the first picture of economic performance in the July to September period. The Stormont Executive's ability to agree a budget before the UK government's own budget announcement on October 28 will be a key determinant of economic confidence in the final quarter of the year. Economy Minister Archibald has indicated that she intends to publish a new economic strategy before the end of 2026, setting out the Executive's priorities for growth, skills, and regional development over the next five years. The strategy is expected to place particular emphasis on the green economy, digital infrastructure, and the life sciences sector.
