ulster bank ni pmi slide pack, april 2013

Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

Includes analysis of Global, Eurozone, UK, UK Regions, NI &

Republic of Ireland economic performance by sector

April 2013 Survey Update

Issued 13th

May 2013

Richard Ramsey

Chief Economist Northern Ireland

[email protected]

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 in April…

Global Output - PMI

25

30

35

40

45

50

55

60

65

Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

Total Manufacturing Services

Source: Markit Economics

ExpansionC

ontraction

… but all sectors within the Eurozone are still contracting

Eurozone PMIs: Output

25

30

35

40

45

50

55

60

65


Composite (M&S) Manufacturing Services Construction

Source: Markit Economics Output Indices Expansion

Contraction

Australia, Spain & France post the steepest falls in manufacturing output. Denmark posts strongest gain

PMIs: Manufacturing Output April 2013

30 35 40 45 50 55 60 65

AustraliaSpain

FranceGreece

ItalyPoland

EZIreland

EUGermany

AustriaNI

NetherlandsCanada

SingaporeIndia

TurkeyUK

Czech RepublicChinaGlobalRussia

VietnamIsrael*

IndonesiaBrazil

TaiwanJapan

S.AfricaMexico

N.Zealand*Switzerland

USS.Korea

Denmark

Source: Markit Economics Output Indices, *March

UK, NI & RoI

Services output expanding for BRICs, US, Japan, UK & Ireland. Australia, France & Spain post the steepest declines

PMIs: Services Output April 2013

40 45 50 55 60

AustraliaFranceSpain

ItalyEZEU

GermanyNI

IndiaChinaBrazil

Emerging MarketsJapanGlobal

UKRussia

US*Ireland

Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services

€

The four largest economies within the eurozone are now contracting

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

30

35

40

45

50

55

60

65


Source: Markit Economics PMIs

Contraction

Expansion

The US & China signal a loss in momentum in April

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

35

40

45

50

55

60

65

Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

Eurozone US (ISM) China UK


ExpansionC

ontraction

… but Japan’s PMI overtakes the US and China. A depreciating yen is aiding Japanese manufacturing…

Manufacturing PMIs

25

30

35

40

45

50

55

60

65


US (ISM) China Japan Eurozone


Contraction

Expansion

… but strong Aussie $ and a slowdown in Asia is pushing Australia ‘Down Under’

Australia - PMI

30

35

40

45

50

55

60

65

Dec-07 Aug-08 Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13

Manufacturing Services No Change

Source: Markit Economics PMIs

Contraction

Expansion

UK & the RoI post a pick-up in business activity in April whilst the rate of contraction remains unchanged for NI

Private Sector Business Activity - PMIs

30

35

40

45

50

55

60

65

Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13

NI UK RoI

Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction

Expansion

Contraction

**PMI Surveys Exclude Agriculture & Public Sector**

PMI is more negative than DFP’s new private sector composite index suggests (combines DFP indices for construction, services, agriculture & industrial production)

NI Private Sector Output Index Versus NI PMI

-5

-4

-3

-2

-1

0

1

2

3

4

5

2002 Q4 2004 Q2 2005 Q4 2007 Q2 2008 Q4 2010 Q2 2011 Q4 2013 Q2*

PSO Q/Q%

30

35

40

45

50

55

60

65PMI

NI PSO Index Left Hand Scale UB PMI Right Hand Scale

Source: New DFP Northern Ireland Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI, * refers to April 2013

50 mark is the threshold for expansion / contraction with PMI

Expansion

Contraction

NI output, new orders and employment all post modest contractions over the last 3 months

NI Private Sector Activity3 month moving average

30

35

40

45

50

55

60

65

70


Business Activity New Business Employment

Source: Markit Economics & Ulster Bank NI PMI

ExpansionC

ontraction

Pace of contraction in NI new orders continues. Rate of growth eases in RoI & accelerates in the UK

Private Sector New OrdersMonthly

30

35

40

45

50

55

60

65


NI UK RoI


Orders increasing

Orders C

ontracting

NI’s levels of work outstanding sees its pace of decline ease markedly over the last 3 months

Private Sector Backlogs3 month moving average

30

35

40

45

50

55

60

Apr-03 Dec-04 Aug-06 Apr-08 Dec-09 Aug-11 Apr-13

NI UK RoI


Increasing D

ecreasing

The pace of decline in export orders eases in April

NI New Export BusinessMonthly

20

25

30

35

40

45

50

55

60

65


New Export Orders No Change


Grow

th AcceleratingC

ontraction Accelerating

PMI underestimated job gains in Q2 & Q3 (relative to official jobs survey) marginal job losses in Q4 2012. PMI signals a flat Q1 2013

NI Employment: PMI v QES*

35

40

45

50

55

60

Jun-03 Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Apr-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 April-13 (monthly)

The UK & the RoI record further job gains in April. Conversely, firms in NI report a fall in employment levels

Private Sector Employment LevelsMonthly

30

35

40

45

50

55

60

Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

NI UK RoI


Job Gains

Job Losses

Strong input cost inflation coupled with output price deflation means the profitability squeeze continues

NI Private Sector Profit Squeeze3 Month Moving Average

30

40

50

60

70

80


Output Prices Input Prices No Change

InflationD

eflation


Profits squeeze

Price of goods & services falling

Regional Comparisons

3 UK regions post a contraction in business activity

Output / Business ActivityApril 2013

50 = No change

48.9

51.052.1

40

45

50

55

60

Wal Y&H EM Lon Scot UK SE East SW NW WM NE NI RoI

PMI index

ExpansionC

ontraction


The North East posts the sharpest rate of decline over the last 3 months followed by NI…

Output / Business Activity 3 months to April 2013

50 = No change

48.7

51.3 50.9

40

42

44

46

48

50

52

54

56

Wal Y&H Lon Scot EM SE East UK NW WM SW NI NE RoI

PMI Index


Expansion

Contraction

…but NI has posted the steepest decline over the last 12 months

Output / Business Activity 12 months to April 2013

50 = No change

51.551

45

40

45

50

55

Lon Y&H Wal EM Scot SE WM UK East NW SW NE NI RoI

PMI index

ExpansionC

ontraction


Four English regions & NI report falling employment levels in March …

Employment LevelsApril 2013

50 = No change

50.751.0

47.3

44

46

48

50

52

54

WM SE Wal EM Scot UK East SW Lon NE NW Y&H NI RoI

PMI Index

IncreasingD

ecreasing


…and 4 UK regions (incl. NI) post job losses over last 3 months…

Employment LevelsLast 3 months to April 2013

50 = No change

48.4

50.6

51.3

44

46

48

50

52

54

WM SE Wal East EM Scot Lon UK NE SW NW NI Y&H RoI

PMI Index

IncreasingD

ecreasing


NI posts the steepest decline in employment over the last 12 months

Employment Levels12 months to April 2013

50 = No change

50.1

51.2

47.7

42

44

46

48

50

52

54

EM WM SE Scot East UK Y&H Wal Lon SW NW NE NI RoI

PMI Index

IncreasingD

ecreasing


Sectoral Comparisons

UK service sector growth accelerates in April with manufacturing back above the 50 threshold

UK Business Activity / Output - PMIs

20

30

40

50

60

70


Services Manufacturing Construction


ExpansionC

ontraction

‘Triple-dip’ recession avoided. UK composite PMI for April suggests further growth in Q2

UK GDP versus UK Composite PMI

25

30

35

40

45

50

55

60

65

2006Q3

2007Q2

2008Q1

2008Q4

2009Q3

2010Q2

2011Q1

2011Q4

2012Q3

2013Q2*

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 Apr-13 only

RoI’s services sector sees a pick up in growth but the rate of decline accelerates for construction & manufacturing

RoI Business Activity - PMIs3 month moving average

20

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction No Change


ExpansionC

ontraction

NI services & construction sectors contracting but manufacturing is growing

NI Private Sector Output 3 month moving average

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Expansion

Contraction

…with all three sectors reporting falling employment levels

NI PMI - Employment Index 3 month moving average

25

30

35

40

45

50

55

60

65

Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

Manufacturing Services Construction


Job Gains

Job Losses

Manufacturing posts output & new orders growth over the last three months with modest fall in employment

NI Manufacturing Activity3 month moving average

25

30

35

40

45

50

55

60

65


Business activity New Orders Employment

Source: Markit Economics & Ulster Bank NI

Grow

th acceleratingC

ontraction accelerating

NI outperforming the UK and the RoI in terms of manufacturing output growth

Manufacturing Output3 month moving average

30

35

40

45

50

55

60

65


UK NI RoI No Change


Contraction

Expansion

NI posts the strongest growth in new orders

Manufacturing New Orders3 month moving average

25

30

35

40

45

50

55

60

65


UK NI RoI No Change


Contraction

Expansion

N.Ireland is outperforming its European competitors, aided by sterling’s ongoing weakness

Manufacturing Output - PMI

20

30

40

50

60

70


RoI Italy Spain Greece NI

Source: Markit Economics PMIs, NI is 3 month moving average

Contraction

Expansion

Cost price inflation easing for local manufacturing firms and output prices are rising (return of pricing power)

NI Manufacturing Input & Output Inflation3 month moving average

30

40

50

60

70

80


No Change Input Costs Output Prices

InflationD

eflation


Profits squeeze

PMI signals job gains in Q1 2013 followed by a fall in employment levels in April

NI Manufacturing Employment: PMI v QES*

30

35

40

45

50

55

60

65


PMI Index

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Q/Q



Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms


RoI & UK growth continues while NI’s pace of decline eases

Services Output (excluding Retail)3 month moving average

30

35

40

45

50

55

60

65

70


UK NI RoI No Change


Contraction

Expansion

New orders growth slowing in the RoI & picking up in the UK. Meanwhile NI is still contracting albeit at a weaker rate

Services New Orders (excluding Retail ) 3 month moving average

30

40

50

60

70


UK NI RoI No Change


Contraction

Expansion

NI’s services sector raised prices for its goods & services in April for the first time since September 2008

NI Services Input & Output Inflation3 month moving average

30

40

50

60

70

80


No Change Input Costs Output Prices

InflationD

eflationSource: Markit Economics & Ulster Bank NI PMI

Profits squeeze

…with employment levels still falling in NI over the last three months

Services Employment3 month moving average

30

35

40

45

50

55

60

65


UK RoI NI No Change


Contraction

Expansion

The services PMI underestimated modest employment gains in Q2-Q4 & signals modest decline in Q1 2013

NI Services Employment: PMI v QES*

40

45

50

55

60

65


PMI Index

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Q/Q



Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI and includes the public sector


Local retailers still reporting falling orders & activity

Northern Ireland Retail PMI3 monthly average

25

35

45

55

65

75


Business Activity New Orders Backlogs No Change


ExpansionC

ontraction

Profits squeeze on local retailers appears to be easing

NI Retail Input & Output Inflation3 month moving average

30

40

50

60

70

80

90


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

Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-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


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


PMI Index

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

Q/Q



Job losses

Job gains

*QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms


UK, RoI & NI all post contractions in construction output

Construction Sector Output - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

… and with new orders falling in NI, UK & RoI

Construction Sector New Orders - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


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


Housing Activity Commercial Activity Civil Engineering Activity


ExpansionC

ontraction

Lack of opportunities in the RoI with all construction sub-sectors declining in April

Republic of Ireland Construction Activity - PMI3 month moving average

20

30

40

50

60

70


Housing Activity Commercial Activity Engineering Activity

Source: Markit Economics & Ulster Bank

ExpansionC

ontraction

50 = No change

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ulster bank ni pmi slide pack, april 2013

Economy & Finance