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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
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 (53.7) just shy of January’s 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
NI’s rate of employment growth exceeds the UK for 4th
month 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
NI’s 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 NI’s 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 NI’s 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
NI’s 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
RoI’s 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
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