Northern Ireland economy stabilises in Q4 Northern Quarter 2026

Key points

• Northern Ireland’s Composite Economic Index (CEI) for Quarter 4 2025 shows modest but positive growth versus Quarter 3 2025, indicating a stabilising but constrained economy.​
• The headline figure for the fourth‑quarter 2025 CEI sits slightly above the previous quarter but remains below the long‑run average, underscoring that the region is still operating below potential.​
• Output‑based indicators, including construction and retail sales, improved modestly, while the services sector showed a more muted uptick.​
• Labour‑market data point to a slight easing of pressure, with unemployment broadly steady and vacancies declining from earlier peaks, suggesting a cooling in demand for workers.​
• Inflation‑adjusted household income and spending indicators remain subdued, reflecting ongoing cost‑of‑living pressures even as headline inflation has eased.​
• Public‑sector activity, including government consumption and capital spending, contributed positively to the index, but private‑sector investment remains weak.​
• The Department for the Economy’s commentary stresses that the modest improvement does not yet signal a durable upswing, and risks from external shocks and fiscal‑policy uncertainty remain elevated.​

Northern Quarter (Manchester Mirror), March 26, 2026 – Northern Ireland’s Composite Economic Index (CEI) for Quarter 4 2025 reflects a small but visible uptick in economic activity compared with the previous three‑month period, even as output remains below the long‑run average, according to the latest figures published by the Northern Ireland Statistics and Research Agency (Nisra) on behalf of the Department for the Economy. Analysts describe the data as indicative of a stabilising rather than accelerating economy, with services‑sector growth offset by still‑weak investment and persistent household‑income constraints.​

The CEI, which aggregates 12 core indicators across output, labour‑market conditions, household finances and public‑sector activity, is designed to provide a more timely snapshot of the regional economy than conventional GDP estimates. Official commentary notes that the rate of improvement in cumulative output indices has slowed compared with the previous quarter, pointing to a fragile recovery path.​

What does the latest Composite Economic Index show?

The headline Northern Ireland Composite Economic Index for Quarter 4 2025 sits marginally above the level recorded in Quarter 3 2025, but still falls short of the series’ long‑run mean, highlighting that the economy has not fully regained pre‑pandemic strength. As summarised by the Department for the Economy’s technical note, the quarter‑on‑quarter increase was driven mainly by improved construction output and retail‑sales activity, with services‑sector growth remaining comparatively modest.​

The underlying disaggregated indices show that the services‑output sub‑index rose slightly, reflecting better performance in areas such as professional and business services, while wholesale and retail turnover also contributed positively. However, manufacturing‑output indicators edged down, underscoring the uneven nature of the expansion across sectors.​

How are labour‑market conditions evolving?

Labour‑market components of the CEI and accompanying labour‑market statistics indicate that the tightness previously seen in Northern Ireland’s jobs market is easing, but the transition remains gradual. Unemployment is reported as broadly stable at a low level, while the number of job vacancies has fallen from its recent peak, suggesting that employers are less aggressive in hiring as economic momentum cools.​

As reported by the Department for the Economy’s labour‑market commentary, this combination of steady unemployment and lower vacancy numbers points to a “softening” in demand for labour rather than a sharp downturn. Policymakers and commentators note that many employers are now operating with leaner workforces and are reluctant to expand headcount without clearer signs of sustained demand.​

What is happening to household incomes and spending?

One of the most closely watched aspects of the CEI is the household‑income and spending module, which reflects the cost‑of‑living pressures still weighing on households despite lower headline inflation. Real‑terms income measures indicate only a modest improvement, with average earnings growth broadly offset by residual inflation and higher tax and social‑insurance contributions in some categories.​

Retail‑sales data incorporated into the CEI show that total sales volumes ticked up in Quarter 4 2025, particularly in non‑food segments, but the pace of growth remains below pre‑pandemic trends. The Department for the Economy’s analysis notes that this pattern reflects households trading down in some categories and prioritising essential spending, while discretionary outlays remain restrained.​

How is the public sector influencing the index?

The public‑sector‑activity component of the CEI has become an increasingly important contributor over recent quarters, as government spending and capital programmes help underpin aggregate demand. In Quarter 4 2025, public‑sector consumption and capital‑expenditure indicators show a solid expansion, reflecting the continued rollout of infrastructure and capital‑investment projects across Northern Ireland.​

As highlighted in the Department for the Economy’s official commentary, this public‑sector strength has helped cushion the economy from deeper weakness that might otherwise have occurred given the softer private‑sector investment outlook. However, officials also caution that sustained growth will ultimately depend on a revival in private‑sector capital formation and business confidence.​

What does the data say about private‑sector investment?

Private‑sector investment indicators embedded in the CEI’s broader framework remain one of the weakest links in Northern Ireland’s economic picture. Business‑investment data suggest that firms are continuing to defer or scale back capital expenditure plans, reflecting uncertainty over interest‑rate movements, regulatory changes and the broader macroeconomic environment.​

As noted in the Department for the Economy’s technical annex, many firms have shifted towards “maintenance‑capital” rather than “expansion‑capital,” focusing on keeping existing assets operational rather than expanding capacity. This cautious stance is consistent with survey‑based measures of business confidence, which show improvement in sentiment but not yet at levels associated with robust investment cycles.​

How does the CEI compare with the rest of the UK?

When viewed alongside national‑level UK indicators, Northern Ireland’s CEI suggests that the devolved region is broadly tracking the wider UK economy, but with some differences in sectoral composition and sensitivity to local public‑sector spending. The pacing of recovery in services and retail is broadly similar to that seen in other parts of the UK, but the weight of public‑sector activity in Northern Ireland’s economy means that any change in Whitehall or Belfast‑based fiscal policy can have an outsized impact.​

Commentary from UK‑wide economic observers, as reproduced in subsequent press coverage, stresses that Northern Ireland’s modest gains in Q4 2025 should be seen as part of a fragile, UK‑wide recovery rather than an isolated boom. They caution that external shocks, including any renewed escalation in global energy prices or trade‑policy disruptions, could quickly reverse the current trajectory.​

What are policymakers saying about the outlook?

Reacting to the Q4 2025 CEI release, senior officials at the Department for the Economy have struck a cautious tone. In a statement released alongside the index figures, the department described the improvement as “welcome but tentative,” and warned that “underlying risks remain elevated.”​

The department’s chief economist is reported as noting that while the index suggests the economy is no longer contracting, it is also “far from booming,” and that sustained growth will depend on both stable macroeconomic conditions and targeted interventions to support skills, infrastructure and business investment. Finance Minister Conor Murphy, in separate remarks, has echoed this sentiment, emphasising that the modest pick‑up underlines the need for “prudent” fiscal management and continued investment in public services.​

What are different media outlets highlighting?

Different outlets have framed the Q4 2025 CEI data through slightly different lenses, though all converge on the theme of a fragile recovery. A leading Belfast‑based business daily, summarising the statistics, emphasised that the “slightly better reading” for the composite index had not yet translated into stronger business investment or higher real‑terms pay for most workers.​

A specialist economics blog, analysing the technical annex, stressed that the index’s “slow‑moving” nature means it captures only the early stages of the current phase, and that more granular survey‑based data will be needed to judge whether the uptick is durable. Regional radio and TV news reports have focused on the human‑impact angle, interviewing small‑business owners and retail‑sector workers who say that while footfall has picked up slightly, profit margins remain squeezed by high operating costs.​

Why does this matter for Northern Ireland’s economy?

The modest gain in the Composite Economic Index for Quarter 4 2025 is significant because it signals that Northern Ireland appears to have moved out of the period of stagnation that followed earlier downturns, even if the recovery is shallow. For policymakers, the data provide a basis for maintaining supportive macroeconomic settings while avoiding premature tightening that could choke off fragile growth.​

For businesses and households, the Q4 2025 index offers a mixed picture: there are signs of stabilisation in activity and employment, but real‑terms income growth and investment remain subdued. As the Department for the Economy’s economists stress, the next few quarters will be crucial in determining whether the current uptick marks the start of a more sustained upswing or merely a temporary pause in a still‑challenging environment.​