slide pack, ulster bank ni pmi, may 2014
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Ulster Bank Northern Ireland Purchasing Managers Index (PMI) slidepack. Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector. May 2014 Survey UpdateTRANSCRIPT
Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
May 2014 Survey Update
Issued 9th
June 2014
Richard Ramsey
Chief Economist Northern Ireland
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 manufacturing & services output growth picks up in May with services output at an 8-month high
Global Output - PMI
25
30
35
40
45
50
55
60
65
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
The Eurozone’s recovery loses some momentum with the ‘downturn under construction’ accelerating
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics Expansion
Contraction
Most economies post manufacturing output growth in May
PMIs: Manufacturing Output May 2014
35 40 45 50 55 60 65 70 75
S.AfricaBrazilJapan
RussiaS.Korea
ChinaTurkeyFrancePoland
SingaporeAustralia
MexicoIndia
CanadaAustria
VietnamIndonesia
GreeceGlobal
TaiwanEZ
GermanyEU
SpainN.Zealand*
ItalySwitzerland
NIIreland
NetherlandsUS
Czech RepublicUK
Denmark
Source: Markit Economics Output Indices, *March. For the US ISM is used.
UK, NI & RoI
€
The Republic of Ireland & Northern Ireland posted the fastest rates of service sector output growth in May
PMIs: Services Output May 2014
35 40 45 50 55 60 65
RussiaFranceJapan
AustraliaIndia
BrazilEmerging Markets
ChinaItaly
EZEU
GlobalSpain
GermanyUSUKNI
Ireland
Source: Markit Economics Output Indices
€
The French Composite PMI bucks the wider trend of continued growth amongst other economies in May
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Source: Markit Economics PMIs
Contraction
Expansion
The US & Chinese Composite PMIs improve in May
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
May-08 May-09 May-10 May-11 May-12 May-13 May-14
Eurozone US (ISM) China UK
Source: Markit Economics PMIs, US includes construction
ExpansionC
ontraction
The US recovery, following adverse weather conditions, continues while Japan & China remain sub-50
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
May-08 May-09 May-10 May-11 May-12 May-13 May-14
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
Emerging markets growth remains subdued. Russian PMI is contracting at its fastest rate since May 2009
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Brazil Russia India Emerging Markets
Source: Markit Economics
Contraction
Expansion
Australia’s services & manufacturing sectors remain ‘Down Under’ the 50 threshold in May
Australia - PMI
30
35
40
45
50
55
60
65
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
The UK, NI & the RoI all see their business activity growth rates ease in May albeit rates of growth remain strong
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
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 private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q1 & Q2 2014
NI Private Sector Output Index Versus NI PMI
-6-5-4-3-2-1
012345
2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4 2014 Q2*
NICEI Q/Q%
30
35
40
45
50
55
60
65PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: DFP NI Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI, *Average of April & May for PMI only. Q4 2013 is latest data for NICEI
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI’s recovery took hold in the second half (H2) of 2013
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
2007
H120
07H2
2008
H120
08H2
2009
H120
09H2
2010
H120
10H2
2011
H120
11H2
2012
H120
12H2
2013
H120
13H2
PMI Index
Business Activity New Orders Employment Export Orders ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI
NI firms report record rates of growth in new business in May with job creation accelerating too
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
NI order books growing at a record rate in May which suggests more growth in the months ahead
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Surge in demand has led to rising backlogs of work particularly within NI and RoI
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 11th successive rise in export orders & the fastest rate of growth since August 2007
NI New Export Business
20
30
40
50
60
70
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
PMI for Q1 signals fastest rate of jobs growth in 7 years with even stronger growth rates for Q2
NI Employment: PMI v QES*
35
40
45
50
55
60
2004 Q2 2006 Q2 2008 Q2 2010 Q2 2012 Q2 2014 Q2*
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* refers to average for April & May PMI only
Job creation continues at a rapid rate for all economies in May
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Output cost inflation remains subdued
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
May-04 May-06 May-08 May-10 May-12 May-14
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services rising
Regional Comparisons
Strong growth across all UK regions & the RoI in May
Output / Business ActivityMay 2014
50 = No change
60.659.559.1
40
45
50
55
60
65
70
NE SE NI Lon WM EM UK NW East SW Wal Y&H Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
…all the UK regions & the RoI post strong rates of growth over the last 3 months…
Output / Business Activity 3 months to May 2014
50 = No change
58.9 59.859.7
40
45
50
55
60
65
70
Lon NE NI EM Wal SE East UK SW WM NW Y&H Scot RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity12 months to May 2014
50 = No change
57.257.9
59.3
40
45
50
55
60
65
Lon SE SW NW UK WM EM East Wal NI Y&H NE Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
The UK, RoI and NI all post similar rates of employment growth in May
Employment LevelsMay 2014
50 = No change
56.4 56.3 56.5
46
48
50
52
54
56
58
60
62
NW Lon East NI SE UK Y&H EM WM SW Wal Scot NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
All UK regions and the RoI post strong rates of employment growth over the last 3 months
Employment Levels3 months to May 2014
50 = No change
56.155.7
57.1
46
48
50
52
54
56
58
60
NW Y&H NI East UK Lon SE EM SW Wal Scot NE WM RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
In 2013 NI posted its 1st annual increase in private sector employment since 2007 with that trend continuing in 2014
Employment Levels12 Months to May 2014
50 = No change
54.6
53.1
55.7
46
48
50
52
54
56
58
NW Lon SW East UK SE WM Y&H Scot NI Wal EM NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
All sectors maintain strong rates of growth in May
UK Business Activity / Output - PMIs
20
30
40
50
60
70
May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth between Q2 2013 & Q1 2014 with further growth expected in Q2
UK GDP versus UK Composite PMIUK Composite includes Construction
25
30
35
40
45
50
55
60
65
2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2*
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,* average of April & May for PMI
RoI output growth eases across all sectors in May
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
70
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
All 3 broad sectors within NI saw a marked turnaround in business activity in H2 2013
NI Private Sector Business Activity (PMI)
30
35
40
45
50
55
60
65
2007
H120
07H2
2008
H120
08H2
2009
H120
09H2
2010
H120
10H2
2011
H120
11H2
2012
H120
12H2
2013
H120
13H2
PMI Index
Manufacturing Services Construction Retail
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI
NI’s services and construction sectors report an acceleration in output growth in the 3 months to May
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
with all sectors posting employment growth over the last 3 months
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
NI manufacturing firms report strong rates of growth in output & orders. Employment rising at a record rate
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
70
May-03 Mar-05 Jan-07 Nov-08 Sep-10 Jul-12 May-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI PMI
Grow
th acceleratingC
ontraction accelerating
NI manufacturing firms report an easing in output growth while the RoI & UK see growth rates accelerate
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
May-04 May-06 May-08 May-10 May-12 May-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The UK posts the strongest rates of orders growth, with NI slowing, while RoI firms post a pick-up in new orders growth
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI has been outperforming some of its European competitors for most of the last 12 months
Manufacturing Output - PMI
20
30
40
50
60
70
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
RoI Italy Spain Greece NI
Source: Markit Economics PMIs
Contraction
Expansion
NI manufacturing firms report a significant easing in inflationary pressures
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
The PMI is signalling the fastest rate of manufacturing employment growth in Q1 & Q2 since the PMI began
NI Manufacturing Employment: PMI v QES*
30
35
40
45
50
55
60
65
2004 Q2 2006 Q2 2008 Q2 2010 Q2 2012 Q2 2014 Q2*
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
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 firms
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction* average for April & May for PMI only
Service sector experiences an acceleration in output, new orders & employment growth in the three months to May
NI Service Sector (excludes Retail)3 month moving average
30
35
40
45
50
55
60
65
70
May-03 Mar-05 Jan-07 Nov-08 Sep-10 Jul-12 May-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
All 3 economies post strong rates of growth in services output in May with the RoI leading the way …
Services Output (excluding Retail)3 month moving average
30
40
50
60
70
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
… and new orders growth is accelerating in NI & RoI too
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Service sector posts its 4th consecutive month of output price deflation (falling prices)
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Service sector employment growth remains strong across all 3 economies with NI jobs growth accelerating
Services Employment3 month moving average
30
35
40
45
50
55
60
65
May-04 May-06 May-08 May-10 May-12 May-14
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
In Q1 the services PMI showed its fastest rate of jobs growth since Q4 2007. Strong growth maintained in Q2
NI Services Employment: PMI v QES*
40
45
50
55
60
65
2004 Q2 2006 Q2 2008 Q2 2010 Q2 2012 Q2 2014 Q2*
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* average of April & May for PMI only
NI retailers report a marked slowdown in sales but new orders remained strong in May
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Local retailers report a pick-up in input cost inflation and an easing in output price inflation
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
May-04 Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze intensifing
NI’s construction sector reports record rates of growth in output, new orders & employment over the last 3 months
NI Construction PMI3 month moving average
20
30
40
50
60
70
May-09 May-10 May-11 May-12 May-13 May-14
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…and output prices have been rising at a record rate
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
May-09 May-10 May-11 May-12 May-13 May-14
PMI Index
Input Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
InflationD
eflation
NI’s construction PMI posts its 3rd successive quarterly rise in employment in Q1 & is set for further gains in Q2
NI Construction Employment: PMI v QES*
20
25
30
35
40
45
50
55
60
65
2004 Q2 2006 Q4 2009 Q2 2011 Q4 2014 Q2*
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 Economics, PMI Index 50.0 denotes threshold between expansion / contraction* average for April & May for PMI only
Construction output growth remains strong in all three economies. Growth in RoI & NI is accelerating in Q2
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
70
May-09 May-10 May-11 May-12 May-13 May-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
NI new orders growth hits a record high in May and suggests significant work remains in the pipeline
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
May-09 May-10 May-11 May-12 May-13 May-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms within GB. House building has recently been expanding at its fastest rate in over 11 years
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
May-05 Nov-06 May-08 Nov-09 May-11 Nov-12 May-14
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
…with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 57
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