slide pack ulster bank ni pmi june 2016
TRANSCRIPT
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Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector
June 2016 Survey Update Issued 11th July 2016
Richard RamseyChief Economist Northern Ireland
Twitter @UB_Economics
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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.
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Global output growth remains subdued in June with manufacturing activity rising from May’s 42-month low
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China, Japan and the UK report a deterioration in their composite PMIs in June
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Developed Markets’ PMI stuck in low growth mode while Emerging Markets stagnates
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Emerging Markets’ PMI continues to stagnate with Brazil in recession. Russian PMI hits a 40-month high
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Chinese manufacturing & services PMIs diverge
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Services & manufacturing in low growth mode ‘Down Under’
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Spain & Italy report an acceleration in business activity with France back in contraction territory
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EZ manufacturing output growth quickens in June but services growth slows with retail & construction in decline
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GDP picked up in Q1-16 but composite PMI signals that the Eurozone economy is stuck in a low gear in Q2
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The RoI continues to post the fastest rate of output growth in services with Brazil contracting at a rapid rate
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Manufacturing PMIs for the EZ and the US (ISM) improve in June while Japan & China in contraction mode
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Developed Markets still outperform Emerging Markets. The latter is below 50 for 14th time in 15 months
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New Zealand**, Denmark & Austria record the fastest rates of manufacturing growth. BRICS still struggling
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UK firms report weakest rate of growth since Mar-13 with NI faring slightly better & RoI in robust growth mode
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PMI suggests private sector growth stabilises in Q4-15, accelerates in Q1 2016 but eases in Q2
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2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 but growth slowed
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Output, orders & jobs growth eases in Q2 relative to Q1 with only exports growth increasing albeit marginally
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NI firms reported an improvement in business conditions in June albeit from subdued levels for output & orders
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RoI firms are still reporting strong growth in new orders while NI & UK firms post a marked slowdown in Q2
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RoI firms still reporting rising backlogs while their UK & NI counterparts post declines
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NI export orders fall for the first time in five months
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RoI jobs growth slows but still robust rate while UK hiring slowdown continues with NI posting a pick-up in June
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Input cost inflation accelerating at a faster rate than output prices with implications for profitability
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Regional Comparisons
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The North West tops the regional growth table with London recording its weakest reading since April 2009
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The East Midlands reported the strongest rates of growth in Q2 with London, Scotland & the North East the weakest
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The RoI reported the fastest growth rate in business activity over the last year with Scotland the slowest
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Northern Ireland recorded the strongest rate of job creation within the UK in June
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Yorkshire & Humberside, Scotland & the North East report job losses in Q2 with NI outperforming most of its peers
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Scotland & the North East post job losses over the last year with NI below the UK average
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SectoralComparisons
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Manufacturing output growth rebounds as services slows and construction signals a marked contraction
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The UK’s growth rate slowed in Q1 to 0.4% and is expected to slow further in Q2 based on PMI
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Services was the only sector in the RoI to report a slowdown in activity in June with a pick-up in activity elsewhere
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NI manufacturing was the only sector to report faster rates of growth in Q2 relative to Q1
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Services sector output growth slowing fast with construction contracting & manufacturing improving
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Rate of jobs growth eases within services & construction while recent phase of manufacturing job losses has passed
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NI’s manufacturing firms report a reversal of fortunes following a period of contraction
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NI manufacturing output returns to low-growth mode alongside the UK
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NI manufacturing output emerges from contraction but remains well below its pre-downturn long-term average
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NI & UK firms report a sharp pick-up in new orders growth with RoI reporting a marked slowdown
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Manufacturing output contracts for France with growth accelerating elsewhere
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Higher wage costs (NLW introduced) & import costs push input cost inflation to a 23-month high
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Slowdown in global manufacturing has been hitting employment most notably within the UK & NI
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NI services sector experiences a slowdown across all key indicators in Q2
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NI’s services sector reports a notable slowdown in output growth but still outperforms the UK
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The rate of growth in NI’s services sector falls back below its pre-downturn long-term average in Q2
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NI firms report an easing in new orders growth after recent high as growth slows markedly amongst UK firms
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Input cost inflation picks up with output price rises continuing albeit at a notably weaker rate
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NI & UK firms report an easing in the rate of service sector jobs growth with RoI’s growth rate broadly maintained
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NI retailers are still reporting strong rates of jobs growth but sharp slowdown in sales growth and orders falling
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Input cost inflation for NI retailers hits a 33 month high with output prices rising for the first time in 10 months
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NI’s construction firms in contraction mode with employment growth broadly flat
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Input cost inflation remains steady with pricing power being eroded
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Output growth for RoI firms eases with a more significant slowdown for UK firms & contraction amongst NI firms
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NI firms post a marked contraction in new orders with a rapid slowdown within UK & continued growth within RoI
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UK firms report a sharp fall in housing & commercial activity in June with civil engineering broadly flat
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UK sub-contractors remain in short-supply with rates charged still rising albeit at slower rates than in 2015
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Optimism amongst UK construction firms has been falling lately and is below its long-term average
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All aspects of RoI construction activity have reported a marked acceleration in their growth rates
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RoI’s construction industry still reporting a decrease in the availability of sub-contractors & rising rates of pay
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RoI construction firms still remain very optimistic about the year ahead and well above the long-term average
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Slide 65
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