Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

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

Republic of Ireland economic performance by sector

September 2015 Survey Update

Issued 12th October 2015

Richard Ramsey Chief Economist Northern Ireland

www.ulstereconomix.com

richard.ramsey@ulsterbankcm.com Twitter @UB_Economics

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 manufacturing output expanding at its weakest rate in 29 months with overall output hitting a 9-month low

EZ manufacturing & services sector growth slows & construction still contracting but retail sales improve

The Eurozone’s composite PMI signals some loss of economic momentum in Q3 2015

Manufacturing output growth for the UK & NI is mid-table with BRICS / Emerging markets not faring well

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

Italy, Spain & the UK posted marked decelerations in their growth rates with only France improving in September

Composite PMIs for the US, China, Japan, the Eurozone and the UK all saw their growth rates ease in September

Manufacturing activity weakened further in September in the US, China, EZ & Japan

Chinese Composite PMI hits its lowest level since Jan-09

Emerging Markets PMI hits its lowest level since March 2009

Australia’s services & manufacturing sectors signal a marked improvement in August, but will it last?

NI posts its 5th consecutive month of private sector growth but pace of growth still lags behind the UK & RoI

PMI signalled a slowdown in the pace of jobs growth in H2-14 but rebounds in H1-15 only to slow in Q3-15

PMI suggests growth in DFP’s 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

All indicators improved in Q3-15 relative to H1-15

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

UK & NI firms report a slowdown in new orders growth in Q3 with RoI’s order books still expanding at a rapid rate

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

Export orders rise at their fastest rate in 14-months

RoI & UK firms report robust rates of jobs growth, NI firms increasing their staffing levels albeit at a much weaker rate

Inflationary pressures remain relatively subdued and output prices are falling again

Regional Comparisons

All UK regions bar Scotland post output growth in September

All UK regions posted growth in Q3 but growth in NI, NW & Scotland remains significantly below UK average

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

Scotland, NI and the South West post the weakest rates of job creation within the UK in September

Scotland, NI and the South West 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

UK construction & manufacturing PMIs surprised to the upside in September while services came in much weaker

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

RoI output growth within manufacturing & construction sectors eases in September

All sectors in NI have experienced stronger rates of growth (or weaker rates of decline) in Q3 relative to H1-15

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

Services & manufacturing firms increased their staffing levels in Q3 whilst construction reduced its headcount

NI’s manufacturing firms appear to be experiencing a marked slowdown in Q3 relative to Q2

RoI firms maintain strong rates of output growth but growth rate eases. UK & NI firms post more modest growth rates

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

All economies bar NI & France saw output growth slow or contract (Greece) in September

Input cost inflation for manufacturers remains subdued with output price deflation accelerating

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 employment growth but new orders growth slows

NI firms fail to match the robust rates of growth in the UK & RoI service sectors but UK output growth is slowing fast

RoI firms continue to report very strong rates of growth in new orders whilst growth amongst NI & UK firms slows

NI’s services firms report a marked pick-up in input cost inflation with some erosion in pricing power

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 in Q3

NI retailers report a marked decline in pricing power with output prices falling at their fastest rate since June 2009

NI’s construction firms report a decline in activity, new orders and employment in Q3

Input cost inflation remains subdued as local firms continue to enjoy pricing power

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

UK & RoI firms reporting strong rates of output growth with NI firms lagging someway behind

NI orders decrease over last 3 months with UK & RoI firms reporting an easing in their rates of growth

UK firms post a pick-up in activity across all sub-sectors

UK sub-contractors remain in short-supply although availability has improved over last year

Optimism amongst UK construction firms remains high

RoI construction activity linked to civil engineering & housing experiences a modest improvement in September

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

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