ulster bank northern ireland purchasing managers index (pmi) december 2016
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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
December 2016 Survey Update Issued 17th January 2017
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 hits a 13-mth high• Growth accelerates in UK, Japan, Russia, France & RoI• Chinese PMI hits highest level (53.5) since Mar-13• Eurozone composite PMI (54.4) hits highest level in >5½ yrs • Brazil (45.2) & India (47.6) composite PMIs signal contraction• Global input price inflation hits a 63-mth high• Developed & Emerging Market manufacturing PMIs hit 30-
mth & 29-mth highs• UK output growth accelerates to a 17-mth high (56.4) • RoI business activity accelerates to a 6-mth high (57.2)• NI firms report fastest rate of growth (58.7) in almost 2½yrs• NI retail sales hit a record high of 67.8• NI retailers also raising prices at a record rate
December 2016 PMIs – Key highlights
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Global output growth rate at a 13-month high
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UK & Japan report a marked acceleration in their growth rates in December
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Developed Markets PMI hits a 12-month high while Emerging Markets rises to a 27-month high
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Emerging Markets’ PMI remains in growth mode with divergence between Russia and India & Brazil
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Chinese services PMI hits a 19-month high with manufacturing approaching a 4-year high
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Strong growth ‘Down Under’
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UK & France report a marked acceleration in growth with Italy the only economy reporting a slowdown
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All sectors of the Eurozone economy in expansion mode
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GDP remained stuck in a low gear in Q2 & Q3 but PMI signals more momentum in Q4
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Australia, Ireland & Russia top the service sector growth league with India & Brazil at the bottom
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A pick-up in manufacturing activity is evident across all economies in December
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Developed & Emerging Markets manufacturing PMIs hit 30-month and 29-month highs respectively
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NI firms report their fastest rate of growth in 29 months with RoI & UK firms reporting an improvement too
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PMI suggests private sector growth stalls in Q3 & recovers in Q4
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2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 & 2016
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Output & orders rebound in Q4 but pace of job creation eases. Sterling weakness triggers surge in exports
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NI firms report a marked pick-up in output and new new orders growth but jobs growth remains subdued
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UK & RoI firms report a marked pick-up in new orders growth overtaking NI’s growth rate
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RoI, UK & NI firms report rising backlogs
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NI export orders ease from their record high with £ weakness cited as a factor behind strong demand
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RoI, UK & NI jobs growth accelerates with NI firms reporting the weakest rates of employment creation
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Input cost inflation in Q4 hits its highest level since Q2-11. Output prices rise at their fastest rate since Q3-08
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Regional Comparisons
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The East of England topped the regional growth table in December with Scotland at the foot of the league table
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Scotland, NI & the North East post the weakest growth rates of all the UK regions in Q4 2016
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The RoI reported the fastest growth rate in business activity over the last year with Scotland stagnating
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NI reports the 3rd slowest rate of job creation in the UK with Scotland & the North East the weakest
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NI posts the 3rd slowest rate of employment growth of all UK regions in Q4
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Scotland & the North East (job losses) were the only 2 regions not to post growth over the last 12 months
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SectoralComparisons
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Post-Brexit vote pessimism appears to have passed with strong growth in Q4 but will it return?
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The UK’s growth rate remained relatively strong in Q3 at 0.6% q/q which was firmer than PMI suggested
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Construction was the only sector in the RoI to report a slowdown in the rate of growth in December
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NI retailers & manufacturing firms in growth mode in Q4 while services weak & construction in rapid decline
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Subdued service sector growth with retail surging. Construction contracting & manufacturing recovering
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Retail sector hits a record high (67.8) with private sector (excl. retail) at a 26-mth high
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Divergence: the rate of job losses continues for construction with manufacturing & services expanding
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NI’s manufacturing firms report growth across key indicators in Q4
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UK manufacturing output growth moderates at a strong rate, while growth accelerates for NI & RoI firms
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NI manufacturing output growth accelerates above its pre-downturn long-term average
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UK firms report robust rates of growth with NI and RoI firms signalling a marked pick-up in demand too
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NI manufacturing firms performing well against their Eurozone counterparts
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Sterling weakness exacerbating input cost inflation in NI & UK relative to elsewhere
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Input cost inflation rockets from end of Q1-16 with firms raising prices at a weaker rate
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NI’s manufacturing firms reporting a slowdown in jobs growth following a ‘V-shaped recovery’
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All key indicators across NI’s services sector point to low growth
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UK & NI services sector output accelerates but their respective growth rates remain below RoI equivalent
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The growth rate in NI’s services sector remains relatively subdued & well below its pre-downturn long-term average
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New orders growth up sharply for UK & RoI firms with NI more muted.
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Input cost inflation accelerates with output prices increasing at a much weaker rate
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NI & UK firms report similar rates of service sector jobs growth with RoI’s rate accelerating
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NI retailers are still recruiting staff at a significant rate with sales and orders growth accelerating
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NI retailers report a marked acceleration in input cost inflation while output price rises pick-up sharply too
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NI’s construction firms posted a contraction in all key indicators in Q4 2016
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Input cost inflation accelerating at a rapid rate with firms increasing prices at a much weaker rate
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NI firms report a sharp decline in output over the last 3 months in contrast to growth amongst UK & RoI firms
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NI firms continue to post a slump in new orders growth in contrast to robust growth amongst RoI & UK firms
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UK firms report an improvement in conditions across housing, commercial & civil engineering activity
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Slowdown in construction sector briefly led to an increase in supply of sub-contractors
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Optimism amongst UK construction firms remains below its long-term average
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RoI housing and commercial construction activity has been improving while engineering output falls
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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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