Northern Ireland PMI slide pack, January 2013

Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

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

Republic of Ireland economic performance by sector

January 2013 Survey Update

Issued 11th

February 2013

Richard Ramsey

Chief Economist Northern Ireland

[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 eases from 9-month high with manufacturing posting its 3rd successive month of growth

Global Output - PMI

25

30

35

40

45

50

55

60

65

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Total Manufacturing Services

Source: Markit Economics

ExpansionC

ontraction

All sectors within the Eurozone are still contracting

Eurozone PMIs: Output

25

30

35

40

45

50

55

60

65


Composite (M&S) Manufacturing Services Construction

Source: Markit Economics Output Indices Expansion

Contraction

Greece, Australia & France post steepest falls in manufacturing output. Denmark posts strongest gain

PMIs: Manufacturing Output January 2013

35 40 45 50 55 60 65

GreeceAustralia

FranceSpainIsrael

JapanEZ

CzechS.Korea

ItalyEU

AustriaSouth Africa

IndonesiaSingapore

PolandCanada

NIVietnam

NetherlandsIreland

GermanyGlobal

N.ZealandChina

RussiaTaiwan

USIndia

UKBrazil

TurkeySwitzerland

MexicoDenmark

Source: Markit Economics Output Indices

NI, RoI & UK

Services output expanding for BRICs, US, Germany, Japan & Ireland. France & Italy posting the steepest contractions

PMIs: Services Output January 2013

40 45 50 55 60 65

FranceItaly

NIAustralia

SpainEZEUUK

JapanGlobalChinaBrazil

Emerging MarketsGermany

RussiaUS*

IrelandIndia

Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services

€

Divergence between Germany & France is worth watching

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

30

35

40

45

50

55

60

65


Source: Markit Economics PMIs

Contraction

Expansion

US remains the best performer relative to China, UK & EZ

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

35

40

45

50

55

60

65

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Eurozone US (ISM) China UK


ExpansionC

ontraction

… and US manufacturing is expanding at a faster rate than China

Manufacturing PMIs

25

30

35

40

45

50

55

60

65

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

US (ISM) China Japan Eurozone


Contraction

Expansion

UK & RoI above the expansion threshold whilst the rate of contraction eases for Northern Ireland

Private Sector Business Activity - PMIs

30

35

40

45

50

55

60

65

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

NI UK RoI

Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction

Expansion

Contraction

**PMI Surveys Exclude Agriculture & Public Sector**

PMI suggests further falls in private sector composite index (combines DFP indices for construction, services & industrial production) in Q4 2012 but growth in Q1?

NI Private Sector Output Index Versus NI PMI

-5

-4

-3

-2

-1

0

1

2

3

4

5

2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1*

PSO Q/Q%

30

35

40

45

50

55

60

65PMI

UB PSO Left Hand Scale UB PMI Right Hand Scale

Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economic, * is January only

50 mark is the threshold for expansion / contraction with PMI

Expansion

Contraction

NI output, new orders and employment all see their pace of contraction ease over the last 3 months

NI Private Sector Activity3 month moving average

30

35

40

45

50

55

60

65

70


Business Activity New Business Employment

Source: Markit Economics & Ulster Bank NI PMI

ExpansionC

ontraction

Pace of contraction in NI new orders eases with UK flat

Private Sector New Orders3 month moving average

30

35

40

45

50

55

60

65

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

NI UK RoI


Orders increasing

Orders C

ontracting

NI’s levels of work outstanding still falling at a rapid rate

Private Sector Backlogs3 month moving average

30

35

40

45

50

55

60

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

NI UK RoI


Increasing D

ecreasing

Export orders post its highest reading since January 2008

NI New Export BusinessMonthly

20

25

30

35

40

45

50

55

60

65

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

New Export Orders No Change


Grow

th Acceleratin g

Contraction A

ccelerating

PMI underestimated job gains in Q2 & Q3 (relative to official jobs survey) further job losses signalled in Q4 2012 but growth in Jan-13

NI Employment: PMI v QES*

35

40

45

50

55

60

Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Jan-13

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

Discontinuity in QES Series

Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes the public sector

Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages except January 2013 which is based on single month

Employment gains in the UK, NI & the RoI in January. The last time all 3 posted employment gains was November 2007

Private Sector Employment LevelsMonthly

30

35

40

45

50

55

60


NI UK RoI


Job Gains

Job Losses

Input cost inflation accelerates in January with output prices and charges still falling

NI Private Sector Profit Squeeze3 Month Moving Average

30

40

50

60

70

80


Output Prices Input Prices No Change

InflationD

eflation


Profits squeeze

Price of goods & services falling

Regional Comparisons

2 UK regions post a contraction in January with the North East posting the steepest decline followed by NI…

Output / Business ActivityJanuary 2013

50 = No change

51.7

48.3

53.8

35

40

45

50

55

60

Wal Y&H EM SE Lon Scot UK SW East NW WM NI NE RoI

PMI index

ExpansionC

ontraction


NI posts sharpest rate of decline over the last 3 months…

Output / Business Activity 3 months to January 2013

50 = No change

44.9

53.5

50.6

40

42

44

46

48

50

52

54

56

Wal Y&H Lon Scot SE UK SW NW East WM EM NE NI RoI

PMI Index


Expansion

Contraction

……and over the last 12 months

Output / Business Activity 12 months to January 2013

50 = No change

51.7 51.6

43.7

40

45

50

55

WM Lon Y&H EM SE UK Wal Scot East NW SW NE NI RoI

PMI index

ExpansionC

ontraction


Three English regions report falling employment levels in January …

Employment LevelsJanuary 2013

50 = No change

51.350.7

53.3

42

44

46

48

50

52

54

56

SE Y&H East EM WM UK Lon Scot NI Wal NW NE SW RoI

PMI Index

IncreasingD

ecreasing


…and 5 UK regions (incl. NI) post declines over last 3 months…

Employment LevelsLast 3 months to January 2013

50 = No change

49.0

50.2

52.7

42

44

46

48

50

52

54

SE Y&H EM East Scot Wal UK WM SW NE Lon NI NW RoI

PMI Index

IncreasingD

ecreasing


NI posts the steepest decline in employment over the last 12 months

Employment Levels12 months to January 2013

50 = No change

50.550.9

47.4

42

44

46

48

50

52

54

EM WM SE Y&H Scot East UK SW Wal Lon NE NW NI RoI

PMI Index

IncreasingD

ecreasing


Sectoral Comparisons

UK services rebounds in January with manufacturing output growth accelerating. Only construction is sub-50

UK Business Activity / Output - PMIs

20

30

40

50

60

70


Services Manufacturing Construction


ExpansionC

ontraction

UK composite PMI raised the prospect of negative GDP Q4 reading which was realised with a 0.3% decline

UK GDP versus UK Composite PMI

25

30

35

40

45

50

55

60

65

2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1*

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, * refers to Jan-13

Services & manufacturing remain above 50 in the RoI

RoI Business Activity - PMIs3 month moving average

20

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction No Change


ExpansionC

ontraction

All sectors in NI contracting….

NI Private Sector Output 3 month moving average

30

35

40

45

50

55

60

65


Manufacturing Services Construction

Source: Markit Economics & Ulster Bank NI

Expansion

Contraction

… with services and construction sectors still reporting falling employment levels

NI PMI - Employment Index 3 month moving average

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Job Gains

Job Losses

Manufacturing posts employment and new orders growth over the last three months

NI Manufacturing Activity3 month moving average

25

30

35

40

45

50

55

60

65


Business activity New Orders Employment


Grow

th acceleratingC

ontraction accelerating

UK manufacturing output accelerates in January while the RoI sees the pace of growth ease

Manufacturing Output3 month moving average

30

35

40

45

50

55

60

65

Jan-04 Jul-05 Jan-07 Jul-08 Jan-10 Jul-11 Jan-13

UK NI RoI No Change


Contraction

Expansion

All 3 economies post growth in new orders

Manufacturing New Orders3 month moving average

25

30

35

40

45

50

55

60

65

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

UK NI RoI No Change


Contraction

Expansion

N.Ireland manufacturing lagging economies elsewhere

Manufacturing Output - PMI3 month moving average

20

30

40

50

60

70


China Germany US NI UK

Source: Markit Economics PMIs

Contraction

Expansion

Ireland is still outperforming its Eurozone partners & NI

Manufacturing Output - PMI

20

30

40

50

60

70


RoI Italy Spain Greece NI

Source: Markit Economics PMIs, NI is 3 month moving average

Contraction

Expansion

Cost price inflation accelerating for local manufacturing firms though output prices have stopped falling

NI Manufacturing Input & Output Inflation3 month moving average

30

40

50

60

70

80


No Change Input Costs Output Prices

InflationD

eflation


Profits squeeze

PMI signals no major job losses in Q4 & growth in Q1 (Jan- 13) but FG Wilson announcement still to take effect

NI Manufacturing Employment: PMI v QES*

30

35

40

45

50

55

60

65


PMI Index

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Q/Q


Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages except Jan-13 (monthly)


Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms

RoI growth continues while the UK output rebounds in January. Meanwhile NI still posts declines in output

Services Output (excluding Retail)3 month moving average

30

35

40

45

50

55

60

65

70


UK NI RoI No Change


Contraction

Expansion

New orders growth slowing in the UK and continues to contract at a rapid rate in NI

Services New Orders (excluding Retail ) 3 month moving average

30

40

50

60

70


UK NI RoI No Change


Contraction

Expansion

…with employment levels still falling in NI over the last three months (but growth returned in January)

Services Employment3 month moving average

30

35

40

45

50

55

60

65


UK RoI NI No Change


Contraction

Expansion

The PMI signals modest employment declines for the service sector in Q4. But PMI includes private sector only

NI Services Employment: PMI v QES*

40

45

50

55

60

65


PMI Index

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Q/Q



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,PMI 3mth averages except January 2013 which is based on single month

Local retailers still reporting falling orders & activity but pace of decline has eased

Northern Ireland Retail PMI3 monthly average

25

30

35

40

45

50

55

60

65

70


Business Activity New Orders Backlogs No Change


ExpansionC

ontraction

Profits squeeze on local retailers intensifies

NI Retail Input & Output Inflation3 month moving average

30

40

50

60

70

80

90


Input Costs Output Prices No Change

InflationD

eflation


Profits squeeze

NI construction sector still in the midst of a severe downturn

NI Construction PMI3 month moving average

20

30

40

50

60

Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13

Output New Orders Employment

Source: Markit Economics, Ulster Bank PMI

ExpansionC

ontraction

50 = No change

…with profits squeeze continuing

NI Construction Sector Profits Squeeze3 month moving average

20

30

40

50

60

70


PMI IndexInput Prices Output Prices No Change

Source: Markit Economics & Ulster Bank PMI

InflationD

eflation

NI PMI has been a reasonably good predictor of actual job losses in the official employment surveys (QES)

NI Construction Employment: PMI v QES

20

25

30

35

40

45

50

55

60

65


PMI Index

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

Q/Q



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 PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages except Jan-13 (monthly)

UK, RoI & NI all post contractions in construction output

Construction Sector Output - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

… and with new orders falling in NI, UK & RoI

Construction Sector New Orders - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

Growth opportunities for NI firms within GB will wane as activity eases

UK Construction Activity - PMIs3 month moving average

20

30

40

50

60

70


Housing Activity Commercial Activity Civil Engineering Activity


ExpansionC

ontraction

Lack of opportunities in the RoI with all construction sub-sectors declining in January

Republic of Ireland Construction Activity - PMI3 month moving average

20

30

40

50

60

70

Mar-07 May-08 Jul-09 Sep-10 Nov-11 Jan-13

Housing Activity Commercial Activity Engineering Activity

Source: Markit Economics & Ulster Bank

ExpansionC

ontraction

50 = No change

Slide 52

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Northern Ireland PMI slide pack, January 2013