Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
January 2013 Survey Update
Issued 11th
February 2013
Richard Ramsey
Chief Economist Northern Ireland
PMI SurveysPurchasing Managers’
Indexes (PMIs) are monthly surveys of private sector companies
which provide an advance indication of what is happening in the private sector economy
by tracking variables such as output, new orders, employment and
prices across different
sectors.
Index numbers are calculated from the percentages of respondents
reporting an
improvement, no change or decline on the previous month. These indices vary from 0 to
100 with readings of 50.0 signalling no change on the previous month. Readings above
50.0 signal an increase or improvement; readings below 50.0 signal a decline or
deterioration. The greater the divergence from 50.0 the greater
the rate of change
(expansion or contraction). The indices are seasonally adjusted
to take into consideration
expected variations for the time of year, such as summer shutdowns or holidays.
< 50.0 = Contraction 50.0 = No Change > 50.0 = Expansion
Data at a sector level are more volatile and 3‐month moving averages
have been used to
more accurately identify the broad trends.
Global output growth eases from 9-month high with manufacturing posting its 3rd successive month of growth
Global Output - PMI
25
30
35
40
45
50
55
60
65
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
All sectors within the Eurozone are still contracting
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics Output Indices Expansion
Contraction
Greece, Australia & France post steepest falls in manufacturing output. Denmark posts strongest gain
PMIs: Manufacturing Output January 2013
35 40 45 50 55 60 65
GreeceAustralia
FranceSpainIsrael
JapanEZ
CzechS.Korea
ItalyEU
AustriaSouth Africa
IndonesiaSingapore
PolandCanada
NIVietnam
NetherlandsIreland
GermanyGlobal
N.ZealandChina
RussiaTaiwan
USIndia
UKBrazil
TurkeySwitzerland
MexicoDenmark
Source: Markit Economics Output Indices
NI, RoI & UK
Services output expanding for BRICs, US, Germany, Japan & Ireland. France & Italy posting the steepest contractions
PMIs: Services Output January 2013
40 45 50 55 60 65
FranceItaly
NIAustralia
SpainEZEUUK
JapanGlobalChinaBrazil
Emerging MarketsGermany
RussiaUS*
IrelandIndia
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
Divergence between Germany & France is worth watching
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Source: Markit Economics PMIs
Contraction
Expansion
US remains the best performer relative to China, UK & EZ
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Eurozone US (ISM) China UK
Source: Markit Economics
ExpansionC
ontraction
… and US manufacturing is expanding at a faster rate than China
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
US (ISM) China Japan Eurozone
Source: Markit Economics
Contraction
Expansion
UK & RoI above the expansion threshold whilst the rate of contraction eases for Northern Ireland
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
NI UK RoI
Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests further falls in private sector composite index (combines DFP indices for construction, services & industrial production) in Q4 2012 but growth in Q1?
NI Private Sector Output Index Versus NI PMI
-5
-4
-3
-2
-1
0
1
2
3
4
5
2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1*
PSO Q/Q%
30
35
40
45
50
55
60
65PMI
UB PSO Left Hand Scale UB PMI Right Hand Scale
Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economic, * is January only
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI output, new orders and employment all see their pace of contraction ease over the last 3 months
NI Private Sector Activity3 month moving average
30
35
40
45
50
55
60
65
70
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Pace of contraction in NI new orders eases with UK flat
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Orders increasing
Orders C
ontracting
NI’s levels of work outstanding still falling at a rapid rate
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
Export orders post its highest reading since January 2008
NI New Export BusinessMonthly
20
25
30
35
40
45
50
55
60
65
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Grow
th Acceleratin g
Contraction A
ccelerating
PMI underestimated job gains in Q2 & Q3 (relative to official jobs survey) further job losses signalled in Q4 2012 but growth in Jan-13
NI Employment: PMI v QES*
35
40
45
50
55
60
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Jan-13
PMI Index
-1.5%
-1.3%
-1.0%
-0.8%
-0.5%
-0.3%
0.0%
0.3%
0.5%
0.8%
1.0%Q/Q
PMI Employment Index No Change QES Q/Q
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes the public sector
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages except January 2013 which is based on single month
Employment gains in the UK, NI & the RoI in January. The last time all 3 posted employment gains was November 2007
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Input cost inflation accelerates in January with output prices and charges still falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services falling
Regional Comparisons
2 UK regions post a contraction in January with the North East posting the steepest decline followed by NI…
Output / Business ActivityJanuary 2013
50 = No change
51.7
48.3
53.8
35
40
45
50
55
60
Wal Y&H EM SE Lon Scot UK SW East NW WM NI NE RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI posts sharpest rate of decline over the last 3 months…
Output / Business Activity 3 months to January 2013
50 = No change
44.9
53.5
50.6
40
42
44
46
48
50
52
54
56
Wal Y&H Lon Scot SE UK SW NW East WM EM NE NI RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
……and over the last 12 months
Output / Business Activity 12 months to January 2013
50 = No change
51.7 51.6
43.7
40
45
50
55
WM Lon Y&H EM SE UK Wal Scot East NW SW NE NI RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
Three English regions report falling employment levels in January …
Employment LevelsJanuary 2013
50 = No change
51.350.7
53.3
42
44
46
48
50
52
54
56
SE Y&H East EM WM UK Lon Scot NI Wal NW NE SW RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
…and 5 UK regions (incl. NI) post declines over last 3 months…
Employment LevelsLast 3 months to January 2013
50 = No change
49.0
50.2
52.7
42
44
46
48
50
52
54
SE Y&H EM East Scot Wal UK WM SW NE Lon NI NW RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
NI posts the steepest decline in employment over the last 12 months
Employment Levels12 months to January 2013
50 = No change
50.550.9
47.4
42
44
46
48
50
52
54
EM WM SE Y&H Scot East UK SW Wal Lon NE NW NI RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK services rebounds in January with manufacturing output growth accelerating. Only construction is sub-50
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK composite PMI raised the prospect of negative GDP Q4 reading which was realised with a 0.3% decline
UK GDP versus UK Composite PMI
25
30
35
40
45
50
55
60
65
2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1*
PMI Index
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5GDP Q/Q
GDP Q/Q PMI PMI No Change
Source: ONS & Markit Economics, * refers to Jan-13
Services & manufacturing remain above 50 in the RoI
RoI Business Activity - PMIs3 month moving average
20
25
30
35
40
45
50
55
60
65
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Manufacturing Services Construction No Change
Source: Markit Economics
ExpansionC
ontraction
All sectors in NI contracting….
NI Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
… with services and construction sectors still reporting falling employment levels
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Manufacturing posts employment and new orders growth over the last three months
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI PMI
Grow
th acceleratingC
ontraction accelerating
UK manufacturing output accelerates in January while the RoI sees the pace of growth ease
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Jan-04 Jul-05 Jan-07 Jul-08 Jan-10 Jul-11 Jan-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
All 3 economies post growth in new orders
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
N.Ireland manufacturing lagging economies elsewhere
Manufacturing Output - PMI3 month moving average
20
30
40
50
60
70
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
China Germany US NI UK
Source: Markit Economics PMIs
Contraction
Expansion
Ireland is still outperforming its Eurozone partners & NI
Manufacturing Output - PMI
20
30
40
50
60
70
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
RoI Italy Spain Greece NI
Source: Markit Economics PMIs, NI is 3 month moving average
Contraction
Expansion
Cost price inflation accelerating for local manufacturing firms though output prices have stopped falling
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
PMI signals no major job losses in Q4 & growth in Q1 (Jan- 13) but FG Wilson announcement still to take effect
NI Manufacturing Employment: PMI v QES*
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Jan-13
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Q/Q
PMI Employment Index No Change QES Q/Q
Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages except Jan-13 (monthly)
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms
RoI growth continues while the UK output rebounds in January. Meanwhile NI still posts declines in output
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
New orders growth slowing in the UK and continues to contract at a rapid rate in NI
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…with employment levels still falling in NI over the last three months (but growth returned in January)
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The PMI signals modest employment declines for the service sector in Q4. But PMI includes private sector only
NI Services Employment: PMI v QES*
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Jan-13
PMI Index
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
Q/Q
PMI Employment Index No Change QES Q/Q
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI and includes the public sector
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages except January 2013 which is based on single month
Local retailers still reporting falling orders & activity but pace of decline has eased
Northern Ireland Retail PMI3 monthly average
25
30
35
40
45
50
55
60
65
70
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Profits squeeze on local retailers intensifies
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
NI construction sector still in the midst of a severe downturn
NI Construction PMI3 month moving average
20
30
40
50
60
Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…with profits squeeze continuing
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13
PMI IndexInput Prices Output Prices No Change
Source: Markit Economics & Ulster Bank PMI
InflationD
eflation
NI PMI has been a reasonably good predictor of actual job losses in the official employment surveys (QES)
NI Construction Employment: PMI v QES
20
25
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Jan-13
PMI Index
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
Q/Q
PMI Employment Index No Change QES Q/Q
Discontinuity in QES Series
Job losses
Job gains
*QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms
Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages except Jan-13 (monthly)
UK, RoI & NI all post contractions in construction output
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
… and with new orders falling in NI, UK & RoI
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Growth opportunities for NI firms within GB will wane as activity eases
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
Lack of opportunities in the RoI with all construction sub-sectors declining in January
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
Mar-07 May-08 Jul-09 Sep-10 Nov-11 Jan-13
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 52
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