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Slide pack for the December 2013 Ulster Bank NI PMI, including analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector
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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 2013 Survey Update
Issued 13th
January 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 output growth ends the year expanding at a faster rate than it started 2013 for both sectors
Global Output - PMI
25
30
35
40
45
50
55
60
65
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
The Eurozone started 2013 will all sectors contracting now only construction is waiting for a return to growth
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics Output Indices Expansion
Contraction
Vast majority of economies posting output growth with US & the UK the top performers. France is still contracting
PMIs: Manufacturing Output December 2013
35 40 45 50 55 60 65 70
FranceAustralia
SingaporeIndonesia
RussiaGreece
S.KoreaIndia
Israel**ChinaBrazil
VietnamSpain
MexicoSwitzerland
PolandCanada
S.Africa*IrelandTurkey
EZGlobal
EUNI
ItalyCzech Republic
DenmarkAustria
GermanyJapan
TaiwanNetherlandsN.Zealand*
UKUS
Source: Markit Economics Output Indices, *November ** October. For the US ISM is used.
UK, NI & RoI
€
The Republic of Ireland, the UK and NI post the fastest rates of service sector output growth in December
PMIs: Services Output December 2013
35 40 45 50 55 60 65
AustraliaIndia
FranceItaly
ChinaEZ
Emerging MarketsBrazil
JapanEU
GermanyRussiaGlobalSpain
US*NI
UKIreland
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
Composite PMIs for Ireland, Spain and Italy all improve in December while France sees its contraction accelerate
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13
Source: Markit Economics PMIs
Contraction
Expansion
The UK, US & China saw their composite PMIs slip in December while the Eurozone’s moved higher
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
Jun-08 May-09 Apr-10 Mar-11 Feb-12 Jan-13 Dec-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 December
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Jun-08 May-09 Apr-10 Mar-11 Feb-12 Jan-13 Dec-13
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
Growth eased in the Emerging Markets PMI due to a slowdown in China and India
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Jul-07 Jun-08 May-09 Apr-10 Mar-11 Feb-12 Jan-13 Dec-13
Brazil Russia India Emerging Markets No Change
Source: Markit Economics
Contraction
Expansion
Australia’s manufacturing and services sectors remain in contraction territory in December
Australia - PMI
30
35
40
45
50
55
60
65
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
The UK & NI see growth rates ease in December while the RoI’s posts an acceleration in its rate of growth
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-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
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI firms report an acceleration in job creation but pace of business activity & new orders growth slows
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Buoyant order books suggest more growth in the months ahead. New orders remain close to recent 9-year high
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
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 accelerating rapidly in Q4
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Dec-03 Aug-05 Apr-07 Dec-08 Aug-10 Apr-12 Dec-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 6th successive rise in export orders with December the fastest rate of growth in over 6 years
NI New Export Business
20
30
40
50
60
70
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
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
UK, RoI & NI firms all experienced strong rates of job creation in December
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
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
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
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 and the RoI in December
Output / Business ActivityDecember 2013
50 = No change
56.5
59.558.6
40
45
50
55
60
65
70
SW WM NE Lon SE East UK EM NW Wal NI Y&H Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
…all the UK regions & the RoI post growth in Q4
Output / Business Activity Q4 2013
50 = No change
58.1 57.7
60.5
40
45
50
55
60
65
70
Lon SW EM SE UK NW WM East Wal NI NE Y&H Scot RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity2013
50 = No change
53.4
56.6
54.2
45
50
55
60
Lon NW SE EM Wal UK SW Y&H East WM Scot 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 December …
Employment LevelsDecember 2013
50 = No change
55.254.5
55.4
46
48
50
52
54
56
58
60
SW Lon SE UK NW East NI WM Y&H Scot EM Wal NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
… and over the last 3 months
Employment LevelsQ4 2013
50 = No change
55.2
52.9
55.5
44
46
48
50
52
54
56
58
Lon SW SE UK East WM NW Wal NI Scot EM Y&H NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
NI posts its first annual increase in private sector employment since 2007
Employment Levels2013
50 = No change
52.6
53.5
50.4
46
48
50
52
54
56
WM Lon SE SW East UK NW Scot Wal EM NE Y&H NI RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
All 3 UK sectors maintain strong rates of growth in December
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth in Q2-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
The RoI’s manufacturing & service sectors experience a pick-up in their growth rates in December
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
All 3 broad sectors within NI saw robust rates of output growth in Q4
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
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
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
Manufacturing Services Construction
Source: Markit Economics &Ulster Bank NI PMI
Job Gains
Job Losses
NI manufacturers continue to report strong rates of growth in orders, employment & output over the last 3 months
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
UK, RoI & NI manufacturing firms continue to post strong rates of growth in output during the last 3 months
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
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
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Lately NI has been outperforming its European competitors
Manufacturing Output - PMI
20
30
40
50
60
70
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13
RoI Italy Spain Greece NI
Source: Markit Economics PMIs
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
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
PMI underestimated jobs surge in Q2. Following further job creation in Q3, PMI suggests more of the same in Q4
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
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
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
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
All 3 economies post strong growth in services output in December with NI & RoI activity accelerating in Q4…
Services Output (excluding Retail)3 month moving average
30
40
50
60
70
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
… and an acceleration in new orders growth too
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
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
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Employment growth is accelerating within the service sector in the UK, RoI and NI in Q4
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
In Q4 the services PMI shows the fastest rate of quarterly jobs growth since Q4 2007
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
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
NI retailers continue to report strong rates of growth in business activity and new orders in December
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Local retailers maintain pricing power in December
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
NI construction sector continues to report growth in output, new orders & employment over the last 3 months
NI Construction PMI3 month moving average
20
30
40
50
60
Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13 Dec-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
Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13 Dec-13
PMI IndexInput Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
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
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
Construction output growth accelerates in the UK & RoI over the last 3 months and remains strong in NI
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13 Dec-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
New orders growth accelerating in all 3 economies
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13 Dec-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms within GB market. House building growth recently hit a 10-year high…
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
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
Apr-07 Aug-08 Dec-09 Apr-11 Aug-12 Dec-13
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 55
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