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Ulster Bank NI PMI Slide Pack May 2017

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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

    May 2017 Survey Update

    Issued 13th June 2017

    Richard RamseyChief 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 (53.7) just shy of Januarys 13-mth high Growth accelerates in US, France, Germany & Japan Chinese composite PMI picks up from 7-mth low to 51.5 Russia, India & China propel Emerging Markets PMI to 52.2 Eurozone composite PMI unchanged at 56.8 a 6-yr high Italian (55.2) & Spanish (57.2) PMIs ease from their recent

    highs but still record robust rates of growth Developed Market manufacturing PMI (54.1) remains just shy

    of recent 35-mth high UK composite PMI (54.5) slows to a 3-mth low. Most regions

    post slower growth rates with East Midlands in top spot 57.9 RoI business activity accelerates to a 4-mth high (58.8) NI firms output growth slows 53.5 but employment growth

    accelerates to a 13-mth high. Inflationary pressures ease

    May 2017 PMIs Key highlights

  • Global output growth rate remains steady with services at a 4-mth high & manufacturing at a 6-mth low

  • Growth accelerates in the US, China & Japan with EZ maintaining its robust rate of growth. UK slowing.

  • Developed Markets PMI growth rate unchanged in May with a slight improvement for Emerging Markets

  • Emerging Markets growth rate accelerates due to China, India & Russia. Brazil expands for 2nd time

  • Chinese services PMI rebounds from a 11-month low with manufacturing activity slowing to an 11-month low

  • Germany & France at 6 year highs. Spain maintains a strong growth rate while Italy & UK report slower rates

  • Growth in EZ services, manufacturing & construction output at or close to 6-year highs

  • Early indications from the PMI suggests EZ may see an acceleration in Q2 economic growth

  • Ireland, Spain & France top the service sector growth league with Brazil back in contraction mode again

  • Euro-zone & Japanese manufacturing activity accelerates with China dipping to an 11-mth low

  • Developed Markets continue to outperform Emerging Markets with the latter slipping to an 8-mth low

  • NI & UK firms report slower rates of growth in May

  • PMI suggests private sector growth stalls in Q3, rebounds in Q4 with momentum retained into Q1/Q2

  • 2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 & 2016 (& H1* 2017)

  • Export orders & employment growth rates quicken in Q2* relative to Q1 with new orders slowing slightly

  • NI firms report a pick-up in orders & jobs growth while the rate of business activity slows

  • RoI & NI firms orders growth quickens with UK firms reporting a slowdown in the rate of growth

  • NI firms no longer report rising backlogs

  • NI export orders growth accelerates to a 4-month high

  • NIs rate of employment growth exceeds the UK for 4thmonth in a row. Both NI & UK lag behind the RoI

  • Input and output cost inflation eases from their recent multi-year highs

  • Regional Comparisons

  • East Midlands & Yorkshire & Humber top the regional growth table with Scotland & the North East at the bottom

  • Scotland, the North East & NI post the weakest growth rates of all the UK regions in the 3 months to May

  • The RoI reported the fastest growth rate in the last year with Scotland close to stagnation

  • NI reports the 6th fastest rate of job creation in the UK with Scotland the only region not posting growth

  • NI private sector employment growth outperforming the UK average over the last 3 months

  • Scotland & the North East (job losses) have reported the weakest rates of jobs growth over the last year

  • SectoralComparisons

  • UK construction output growth accelerates while manufacturing & services output growth slows

  • PMI suggests that UK economic growth could rebound in Q2 following a very disappointing Q1

  • All sectors within the RoI bar services reported faster rates of growth in May

  • Unlike retail & construction, NI manufacturing & services post faster rates of growth in Q2*

  • Service sector & manufacturing growth accelerates with retail slowing. Construction activity remains subdued

  • Construction, manufacturing & services firms report a pick-up in staffing levels in the 3 months to May

  • NIs manufacturing firms report faster rates of growth in output in the 3-mths to May

  • NI, UK & RoI manufacturing firms reporting a pick-up in activity in the 3 months to May

  • NI manufacturing output growth in line with its pre-downturn long-term average after recent Q4 high

  • Rate of growth in UK new orders accelerates while pace of expansion remains steady for NI & RoI firms

  • Manufacturing output accelerates for Spanish, RoI& NI firms

  • Sterling weakness has exacerbated input cost inflation in NI & UK. Though inflationary pressures are easing

  • Input cost inflation hits a record high in Q1 with firms also raising prices at a record rate. Some easing in Q2

  • NI, UK & RoI manufacturing firms report a pick-up in employment growth over the last 3 months

  • Output, new orders & employment growth rates across NIs services sector quickens over the last 3 months

  • NI services sector output growth accelerates in May. Now in line with UK but both still lag the RoI

  • The growth rate in NIs services sector remains well below its pre-downturn long-term average

  • New orders growth rate accelerates for NI & UK services but still lags well behind their RoI counterparts

  • Input cost inflation accelerates to a near 6-year high with output prices inflation more subdued

  • NI firms hiring at an accelerating rate in the 3-mths to May but both NI & UK lagging well behind the RoI

  • Slowdown within retail sector is evident across all sectors though employment growth continues

  • NI retailers report an easing in inflation rates relative to their recent highs

  • NIs construction firms increasing their staffing levels but new orders are contracting again

  • Input cost inflation remains high with firms increasing prices at a much weaker rate

  • NI firms report subdued rates of growth with their RoI & UK counterparts posting faster rates of growth

  • NI firms report falling orders whilst growth accelerates for UK & RoI firms

  • UK firms report an acceleration in housing & commercial activity

  • Construction sector still reporting a shortage of sub-contractors

  • Optimism amongst UK construction firms remains broadly in line with its long-term average

  • RoI housing & commercial construction activity accelerates while engineering output returns to growth

  • RoIs construction industry still reporting a decrease in the availability of sub-contractors & rising rates of pay

  • RoI construction firms still remain very optimistic about the year ahead and well above the long-term average

  • Slide 65

    Disclaimer

    This document is intended for clients of Ulster Bank Limited and Ulster Bank Ireland Limited (together and separately, "Ulster Bank") and is not intended for any other person. It does not constitute an offer or invitation to purchase or sell any instrument or to provide any service in any jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or engage in transactions in any of the instruments mentioned.

    The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication and are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be construed as such.

    This publication provides only a brief review of the complex issues discussed and recipients should not rely on information contain

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