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Slide pack Ulster Bank NI PMI August 2015

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Text of Slide pack Ulster Bank NI PMI August 2015

  • Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

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

    Republic of Ireland economic performance by sector

    August 2015 Survey Update

    Issued 14th September 2015

    Richard Ramsey Chief Economist Northern Ireland

    www.ulstereconomix.com

    [email protected] Twitter @UB_Economics

    mailto:[email protected]

  • PMI Surveys Purchasing 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 rate remains unchanged with services expanding but manufacturing output falls to a 28-month low

  • EZ manufacturing & services sector growth accelerates with retail sectors growth easing & construction still contracting

  • The Eurozones composite PMI signals economic growth rate accelerating in Q3 2015

  • The UK & NI slip down the manufacturing output growth rankings with BRICS / Emerging markets not faring well

  • Australia, the Republic of Ireland & Spain posted the fastest rates of service sector output growth in August

  • Italy, Germany and Spain posted an acceleration in their respective growth rates in August

  • Composite PMIs for Japan & the Eurozone saw a pick-up in their growth rates in August

  • The US (ISM) & Chinese manufacturing PMIs posted the weakest growth rates in August

  • Chinese Composite PMI hits its lowest level since Feb-09

  • Alongside China, the PMIs for the Emerging Markets, Russia and Brazil are all signalling contraction

  • Australias services & manufacturing sectors signal a marked improvement in August, but will it last?

  • NI posts its 4th consecutive month of private sector growth but pace of growth eases & still lags behind the UK & RoI

  • PMI suggests growth in DFPs private sector composite index during 2014 but recovery stalls in Q1-15 with a modest rebound in Q2 & Q3-15

  • 2014 was the first year in 7 years that business activity, new orders, employment & export orders all expanded

    NI Private Sector Performance (PMI)

    30

    35

    40

    45

    50

    55

    60

    2007 2008 2009 2010 2011 2012 2013 2014

    PMI Index

    Business Activity New Orders Employment Export Orders ExpansionC

    ontraction

    Source: Markit Economics & Ulster Bank NI

  • NI recovery took hold in H2-13, all indicators improved in H1-14 & eased in H2-14 with a further slowdown in H1-15

    NI Private Sector Performance (PMI)

    30

    35

    40

    45

    50

    55

    60

    65

    2006

    H2

    2007

    H1

    2007

    H2

    2008

    H1

    2008

    H2

    2009

    H1

    2009

    H2

    2010

    H1

    2010

    H2

    2011

    H1

    2011

    H2

    2012

    H1

    2012

    H2

    2013

    H1

    2013

    H2

    2014

    H1

    2014

    H2

    2015

    H1

    PMI Index

    Business Activity New Orders Employment Export Orders

    ExpansionC

    ontraction

    Source: Markit Economics & Ulster Bank NI PMI

  • NI firms report a pick-up in the pace of job creation but the growth rates for new orders & business activity slow

  • UK, RoI & NI firms continue to report growing order books but the pace of expansion has eased

  • Backlogs of work continue to grow amongst RoI & NI firms with levels of outstanding work amongst UK firms flat

  • Export orders are still struggling and not helped by the sterling / euro exchange rate

  • PMI signalled a slowdown in the pace of jobs growth in H2-14 but rebounds in H1-15

  • RoI firms maintain strong rates of jobs growth in August with NI reporting a marked pick-up in hiring

  • Inflationary pressures remain subdued and output prices are rising again

  • Regional Comparisons

  • All UK regions continue to post output growth in August

  • Most UK regions posted strong rates of growth in the last 3 months but rates of growth remain weak in Scotland & NI

  • The RoI reported the fastest rate of growth in business activity over the last 12 months & Scotland the slowest

  • The East of England & the RoI post the fastest rate of employment growth with Scotland & NI the slowest

  • NI & Scotland post the weakest rates of job creation within the UK over the last 3 months

  • Scotland, the North East & NI posted the weakest rates of jobs growth over the last year with the RoI the strongest

  • Sectoral Comparisons

  • All of the UK PMIs came in weaker than expected in August with services signalling a marked slowdown

  • The UK posts strong rates of growth throughout 2014 & more recently in Q2-15. PMI suggests growth will ease in Q3

  • RoI output growth across all sectors eases in August

  • All sectors in NI experienced weaker rates of growth in H2-14 relative to H1-14 with H1-15 even weaker

    NI Private Sector Business Activity (PMI)

    30

    35

    40

    45

    50

    55

    60

    65

    2006

    H2

    2007

    H1

    2007

    H2

    2008

    H1

    2008

    H2

    2009

    H1

    2009

    H2

    2010

    H1

    2010

    H2

    2011

    H1

    2011

    H2

    2012

    H1

    2012

    H2

    2013

    H1

    2013

    H2

    2014

    H1

    2014

    H2

    2015

    H1

    PMI Index

    Manufacturing Services Construction Retail ExpansionC

    ontraction

    Source: Markit Economics & Ulster Bank NI PMI

  • NI manufacturing & services firms report an easing in output growth in Q3 but contraction within construction continues

  • Services & manufacturing firms are still increasing their staffing levels whilst construction employment is falling

  • NIs manufacturing firms appear to be experiencing a slowdown across all broad indicators

  • RoI firms maintain strong rates of output growth but rates of growth ease for both RoI and NI firms

  • NI firms report a more marked slowdown in manufacturing orders growth than their equivalents in the UK & RoI

  • All economies bar Spain saw output growth slow or contract (France & Greece) in August

  • Input cost inflation for manufacturers remains subdued with output prices still falling

  • PMI signals moderation in jobs growth in H2-14 & Q1-15 following record high in Q2-14, rebound in Q2-15 eases in Q3

  • Service sector experiences a pick-up in orders & employment growth but output growth slows

  • NI firms fail to match the robust rates of growth in the UK & RoI service sectors but output growth is still accelerating

  • RoI & NI firms report a marked pick-up in new orders growth whilst expansion within UK order books slows

  • NIs services firms report a marked pick-up in input cost inflation with some pricing power returning

  • NI services firms increased their staffing levels over the last 3 months but below the rates of growth in the UK & RoI

  • Pace of job creation within the services sector eased in H2-14 but has picked up in H1-15 & accelerated in Q3-15

  • NI retailers report a significant increase in sales and new orders

  • NI retailers report a return of pricing power with output prices rising. Input costs fall for the 1st time in the survey

  • NIs construction firms report a decline in activity, new orders and employment over the last three months

  • Input cost inflation remains subdued as pricing power returns to local construction firms

  • NIs construction PMI posts jobs growth Q3-13 to Q2-15 but this is largely due to NI firms working outside of NI

  • Very strong rates of output growth amongst RoI firms, robust growth with UK firms & contraction amongst NI firms

  • NI orders decrease over last 3 months with UK growth stabilising. RoI firms still reporting robust rates of growth

  • UK firms post a pick-up in civil engineering & commercial activity with housing activity easing

  • UK sub-contractors remain in short-supply with the rates that they charge still rising albeit a weaker rate

  • Optimism amongst UK construction firms remains high

  • RoIs construction activity experiences a marked slowdown in August across all

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