Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

July 2017 Survey Update

Issued 15th August 2017

Richard RamseyChief Economist Northern Ireland

www.ulstereconomix.comrichard.ramsey@ulsterbankcm.com

Twitter @UB_Economics

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 (53.5) eases to a 7-mth low• Growth accelerates in China, US & Italy• Chinese composite rebounds off 12-mth low to 51.9• Emerging Markets’ PMI slips to 10-mth low of 51.4 with

Russia down to 53.4 (10-mth low) & India 46.0 (100-mth low)• Eurozone composite PMI eases to 6-mth low (55.7) • Germany at 10-mth low (54.7), France (55.6) & Spain (56.7)

ease to 6-mth lows while Italian PMI up to 56.2 (3-mth high) • UK composite PMI unchanged at 53.9 with rise in services

(53.8) & manufacturing (55.1) but construction eased to 51.9.• RoI business activity slows to a 4-mth low (57.0)• NI firms’ output & employment growth slow to a 9-mth & 6-

mth lows. But services output accelerates to 16-mth high• Input cost inflation eases to 13-mth low

July 2017 PMIs – Key highlights

Global output growth rate eases to a 7-month low with manufacturing output slipping to a 10-month low

Growth slows in Japan & the EZ. But the US, UK and China show an improvement in July.

Divergence between Developed Markets PMI growth rate and Emerging Markets

Emerging Markets’ growth rate slows to a 10-mth low with India & Brazil contracting and Russia slowing

Chinese composite PMI rebounds off a 12-month low to a 4-month high due to manufacturing sector

UK and Italy were the only two economies to report faster rates of growth in July

The Eurozone’s service sector was the only sector not to post slower rates of growth in July

PMI suggests another strong quarter of EZ economic growth in Q3

Ireland, Spain & Australia top the service sector growth league with India & Brazil in contraction mode

EZ, US & Japanese manufacturing growth rates ease while China’s rate of expansion accelerates

Developed Markets outperforming Emerging Markets

NI, UK & RoI firms report slower rates of growth in July

PMI suggests private sector growth peaked in 2016 Q4 and has eased throughout 2017

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015, 2016 & 2017 ytd

All business indicators (bar new orders) start Q3 on a softer note

NI firms report a slowing in the rate of jobs growth in July but orders and output holding up

New orders growth stabilises amongst NI & RoIfirms. While UK firms signal a slowdown

Almost no change in backlogs of work amongst NI firms

NI export orders growth returns after hitting a 9-month low

NI’s rate of employment growth falls below the UK rate for the 2nd successive month. Both NI & UK lag the RoI

NI’s rate of employment growth has eased in recent quarters but PMI suggests acceleration in Q2

Input & output cost inflation continues to ease back from their recent multi-year highs

Regional Comparisons

Yorkshire & Humber tops the regional growth table with London, NI & the North East (contracting) at the bottom

The North East, Scotland & NI post the slowest rates of growth within the UK in the 3 months to July

The West Midlands reported the fastest growth rate over the last 12 months with Scotland the slowest

NI reports the weakest rate of job creation in the UK after the North East. West Midlands tops the table

NI private sector employment growth under performing against the UK average over the last 3 months

Scotland & the North East (job losses) have reported the weakest rates of jobs growth over the last year

SectoralComparisons

Manufacturing & construction report a slowdown in output growth

PMI suggests that don’t expect a meaningful rebound in UK GDP growth in Q3

RoI signals a slowdown in construction & manufacturing but services output accelerates

NI services industry is the only sector to experience a pick-up in output growth in Q3*

Service sector records the fastest rates of growth followed by manufacturing. Retail & construction flat

Construction & manufacturing firms report a slowdown in jobs growth with hiring in services accelerating

Inflationary pressures easing across all sectors

NI’s manufacturing firms report slower rates of growth in output & employment but orders hold up

NI & UK manufacturers report a slowdown in output growth with RoI maintaining a robust growth rate

NI manufacturing output growth in line with its pre-downturn long-term average

New orders growth rate slows for UK firms and accelerates for RoI businesses. NI growth holds steady

Manufacturing output growth slows for all countries bar Greece!

Sterling weakness exacerbated input cost inflation. But NI/UK input cost inflation has eased to 13-mth low

Input & output cost inflation hits a record high in Q1. But significant easing in inflationary pressures in Q2/Q3

NI manufacturing firms report a slowdown in pace of job creation while UK & RoI post stronger growth rates

NI’s services sector very much in expansion mode

NI services sector output growth accelerates above the UK rate. But both still lag the RoI.

The growth rate in NI’s services sector remains below its pre-downturn long-term average

New orders growth rate eases for RoI, UK & NI services firms but NI /UK still lag well behind RoI

Input cost inflation eases from its near 6-year high with output prices inflation more subdued

NI firms hiring at an accelerating rate and at a faster rate than the UK. But both lagging behind the RoI

Slowdown within retail sector is evident across all indicators though employment growth continues

NI retailers report an easing in inflation rates relative to their recent highs

NI’s construction firms adding to their staffing levels but new orders & output are contracting

Input cost inflation remains high with firms increasing prices at a much weaker rate

NI firms report no growth in output with their RoI & UK counterparts posting faster rates of growth

NI firms report falling orders whilst growth decelerates for UK firms

UK firms report an easing in the rate of growth in housebuilding with commercial activity falling

Construction sector still reporting a shortage of sub-contractors with rates charged rising

Optimism amongst UK construction firms continuing to move further below its long-run average

RoI housing & commercial construction activity strong but slowing while engineering output contracting

RoI’s construction industry still reporting a decrease in the availability of sub-contractors & rising rates of pay

RoI construction firms still remain very optimistic about the year ahead & well above the long-term average

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