ulster bank northern ireland purchasing managers index (pmi) - november 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

November 2013 Survey Update

Issued 9th

December 2013

Richard Ramsey

Chief Economist Northern Ireland

[email protected]

Twitter @UB_Economics

mailto:[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 accelerates in November due to both the services & manufacturing sectors

Global Output - PMI

25

30

35

40

45

50

55

60

65

Jun-07 May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13

Total Manufacturing Services

Source: Markit Economics

ExpansionC

ontraction

… but the Eurozone experiences a slowdown in November due to its services sector

Eurozone PMIs: Output

25

30

35

40

45

50

55

60

65

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

Composite (M&S) Manufacturing Services Construction

Source: Markit Economics Output Indices ExpansionC

ontraction

Top performers within manufacturing include Denmark, US, UK & NI. Underperformers include Australia, France & Spain

PMIs: Manufacturing Output November 2013

35 40 45 50 55 60 65 70

AustraliaFranceSpain

IndonesiaS.KoreaGreece

BrazilRussia

SingaporeIsrael*

IndiaMexico

VietnamChina

EZItaly

IrelandS.Africa

EUGermany

TaiwanGlobalTurkeyPolandAustria

CanadaN.Zealand*SwitzerlandNetherlands

Czech RepublicJapan

NIUKUS

Denmark

Source: Markit Economics Output Indices, *Sep, for the US ISM is used.

NI, UK & RoI

€

N.Ireland, the UK & the Republic of Ireland post the fastest rates of service sector output growth in November

PMIs: Services Output November 2013

35 40 45 50 55 60 65

IndiaItaly

FranceAustralia

EZSpain

RussiaJapan

Emerging MarketsBrazilChina

EUGlobal

US*Germany

IrelandUKNI

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

€

The 2nd & 3rd largest economies within the eurozone are contracting again with the UK & RoI still outperforming

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

30

35

40

45

50

55

60

65

Mar-07 Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13

Source: Markit Economics PMIs

Contraction

Expansion

The UK, US & EZ saw their composite PMIs slip in November while China’s moved higher


35

40

45

50

55

60

65

May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13

Eurozone US (ISM) China UK

Source: Markit Economics PMIs, US includes construction

ExpansionC

ontraction

The US, Japan & the Eurozone all posted an acceleration in manufacturing activity in November

Manufacturing PMIs

25

30

35

40

45

50

55

60

65

May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13

US (ISM) China Japan Eurozone No Change


Contraction

Expansion

PMIs for Russia & Brazil slipped in November but growth in Emerging Markets accelerates overall


30

35

40

45

50

55

60

65


Brazil Russia India Emerging Markets No Change


Contraction

Expansion

Australia’s manufacturing sector joins its services sector in contraction territory in November

Australia - PMI

30

35

40

45

50

55

60

65


Manufacturing Services No Change


Contraction

Expansion

UK & the RoI see growth rates ease in November while NI posts its fastest rate of growth since March 2004

Private Sector Business Activity - PMIs

30

35

40

45

50

55

60

65

Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13

NI UK RoI

Source: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction

Expansion

Contraction

**PMI Surveys Exclude Agriculture & Public Sector**

PMI suggests growth in DFP’s new private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q3 & Q4

NI Private Sector Output Index Versus NI PMI

-6-5-4

-3-2-1012

345

2003 Q2 2004 Q4 2006 Q2 2007 Q4 2009 Q2 2010 Q4 2012 Q2 2013 Q4*

PSO Q/Q%

30

35

40

45

50

55

60

65

PMI NICEI Left Hand Scale PMI Right Hand Scale

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

50 mark is the threshold for expansion / contraction with PMI

Expansion

Contraction

NI firms report an acceleration in business activity & new orders growth but pace of job creation slows

NI Private Sector ActivityMonthly

30

35

40

45

50

55

60

65

70


Business Activity New Business Employment

Source: Markit Economics & Ulster Bank NI PMI

ExpansionC

ontraction

Buoyant order books suggest more growth in the months ahead. NI posts its fastest rate of growth since July 2004

Private Sector New OrdersMonthly

30

35

40

45

50

55

60

65


NI UK RoI

Source: Markit Economics & Ulster Bank NI

Orders increasing

Orders C

ontracting

Surge in demand is leading to backlogs of work with NI index posting a record high in November

Private Sector Backlogs3 month moving average

30

35

40

45

50

55

60

Nov-03 Jul-05 Mar-07 Nov-08 Jul-10 Mar-12 Nov-13

NI UK RoI


Increasing D

ecreasing

NI firms post their 5th successive increase in export orders in November

NI New Export Business

20

30

40

50

60

70


New Export Orders No Change


Expansion

Contraction

PMI underestimated QES job gains in 2012. PMI for Q3 signals fastest rate of jobs growth since Q4 2007 with even stronger growth in Q4

NI Employment: PMI v QES**

35

40

45

50

55

60

2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*

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

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

Discontinuity in QES Series

Job losses

Job gains

Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to average for October & November

UK, RoI & NI firms all experienced jobs growth in November albeit at a weaker rate than October

Private Sector Employment LevelsMonthly

30

35

40

45

50

55

60

Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13

NI UK RoI


Job Gains

Job Losses

Private sector’s profitability squeeze remains but pricing power is on the rise

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 rising

Regional Comparisons

PMIs Indian summer continues with strong growth everywhere & NI moving up the PMI league table…

Output / Business ActivityNovember 2013

50 = No change

60.5

55.6

60.2

40

45

50

55

60

65

70

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

PMI Index

ExpansionC

ontractionSource: Markit Economics & Ulster Bank NI PMI

…all the UK regions post growth over the last 3 months

Output / Business Activity 3 months to November 2013

50 = No change

58.8

56.7

60.8

40

45

50

55

60

65

70

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

PMI Index


Expansion

Contraction

… and over the last 12 months

Output / Business Activity 12 months to November 2013

50 = No change

52.5

55.7

53.8

45

50

55

60

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

PMI Index

ExpansionC

ontractionSource: Markit Economics & Ulster Bank NI PMI

All the UK regions and the Republic of Ireland post employment growth in November …

Employment LevelsNovember 2013

50 = No change

54.8

51.2

55.5

46

48

50

52

54

56

58

60

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

PMI Index

IncreasingD

ecreasingSource: Markit Economics & Ulster Bank NI PMI

… and over the last 3 months to November

Employment Levels3 months to November 2013

50 = No change

54.7

51.9

55.3

44

46

48

50

52

54

56

58

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

PMI Index

IncreasingD

ecreasing


NI posts a marginal decline in employment with the West Midlands & RoI the sharpest rise over the last 12 months

Employment Levels12 months to November 2013

50 = No change

52.1

53.2

49.9

46

48

50

52

54

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

PMI Index

IncreasingD

ecreasing


Sectoral Comparisons

All 3 UK sectors maintain strong rates of growth in November with services still close to its 16-year high

UK Business Activity / Output - PMIs

20

30

40

50

60

70


Services Manufacturing Construction


ExpansionC

ontraction

UK economic growth accelerates in Q2, Q3 & Q4

UK GDP versus UK Composite PMIUK Composite includes Construction

25

30

35

40

45

50

55

60

65

2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4*

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 October & November average

The RoI’s manufacturing & service sectors experience a slowdown in their growth rates in November

RoI Business Activity - PMIsMonthly

20

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction No Change


Contraction

Expansion

All 3 broad sectors within NI saw their rates of growth in output accelerate over the last 3 months

Northern Ireland Private Sector Output 3 month moving average

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Expansion

Contraction

…with all sectors also reporting job gains over the last 3 months

NI PMI - Employment Index 3 month moving average

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Job Gains

Job Losses

NI’s manufacturing sector posts an acceleration in orders, employment & output growth over the last 3 months

NI Manufacturing Activity3 month moving average

25

30

35

40

45

50

55

60

65


Business activity New Orders Employment


Grow

th acceleratingC

ontraction accelerating

UK & NI manufacturing firms signal very strong rates of growth in output during the last 3 months

Manufacturing Output3 month moving average

30

35

40

45

50

55

60

65


UK NI RoI No Change


Contraction

Expansion

The UK posts the strongest rate of 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

Manufacturing Output - PMI

20

30

40

50

60

70


RoI Italy Spain Greece NI


Contraction

Expansion

Cost price inflation remains for local manufacturing firms but pricing power is improving due to increased demand

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 underestimated manufacturing job surge in Q2. But PMI suggests further job gains in Q3 & Q4 2013

NI Manufacturing Employment: PMI v QES**

30

35

40

45

50

55

60

65

2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*

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


Recent growth in NI service sector output has fed through into higher levels of employment…

NI Service Sector (excludes Retail)3 month moving average

30

35

40

45

50

55

60

65

70


Business activity New Orders Employment


Grow

th acceleratingC

ontraction accelerating

All 3 economies post strong growth in services output in November with NI activity accelerating…

Services Output (excluding Retail)3 month moving average

30

35

40

45

50

55

60

65

70


UK NI RoI No Change


Contraction

Expansion

… and an acceleration in new orders growth too

Services New Orders (excluding Retail ) 3 month moving average

30

40

50

60

70


UK NI RoI No Change


Contraction

Expansion

Output prices within service sector firms over the last 3 months rise at their fastest rate in over 5 years

NI Services Input & Output Inflation3 month moving average

30

40

50

60

70

80


No Change Input Costs Output Prices

InflationD

eflation


Profits squeeze

Employment growth is accelerating in the UK but NI firms signal a slowdown in service sector jobs growth

Services Employment3 month moving average

30

35

40

45

50

55

60

65


UK RoI NI No Change


Contraction

Expansion

In Q3 the services PMI shows quarterly jobs growth for the 1st time since Q1 2008 with further growth in Q4

NI Services Employment: PMI v QES*

40

45

50

55

60

65

2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*

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

Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to October & November average

Retailers summer boom extends into November but pace of growth has slowed

Northern Ireland Retail PMI3 monthly average

25

35

45

55

65

75


Business Activity New Orders Backlogs No Change


Expansion

Contraction

Local retailers maintain pricing power in November

NI Retail Input & Output Inflation3 month moving average

30

40

50

60

70

80

90


Input Costs Output Prices No Change

InflationD

eflation


Profits squeeze

NI construction sector reports growth in output, new orders & employment over the last 3 months…

NI Construction PMI3 month moving average

20

30

40

50

60

Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13

Output New Orders Employment

Source: Markit Economics, Ulster Bank PMI

ExpansionC

ontraction

50 = No change

…and output prices have been rising

NI Construction Sector Profits Squeeze3 month moving average

20

30

40

50

60

70


PMI Index

Input Prices Output Prices No Change

Source: Markit Economics & Ulster Bank PMI

InflationD

eflation

NI’s construction PMI posted its 1st quarter of jobs growth in Q3 2013 since Q4 2007 with further growth in Q4

NI Construction Employment: PMI v QES**

20

25

30

35

40

45

50

55

60

65

2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*

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


Construction output accelerates in the UK, RoI and NI over the last 3 months

Construction Sector Output - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

New orders growth accelerating in all 3 economies

Construction Sector New Orders - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

Opportunities for NI firms within GB market. House building growth hits a 10-year high…

UK Construction Activity - PMIs3 month moving average

20

30

40

50

60

70

Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13

Housing Activity Commercial Activity Civil Engineering Activity


ExpansionC

ontraction

…with opportunities returning within the RoI too

Republic of Ireland Construction Activity - PMI3 month moving average

20

30

40

50

60

70

Mar-07 Jul-08 Nov-09 Mar-11 Jul-12 Nov-13

Housing Activity Commercial Activity Engineering Activity

Source: Markit Economics & Ulster Bank

ExpansionC

ontraction

50 = No change

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ulster bank northern ireland purchasing managers index (pmi) - november 2013

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