Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector
November 2017 Survey Update
Issued 11th December 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 remains at 2½-yr high of 54.9.• Global manufacturing output growth quickens to 80-mth high• Growth accelerates in China, Russia & the EZ (notably France) • India sluggish (50.3) & Brazil contracting 48.9• EZ composite (57.5) highest since Apr-11.• Pick-up in EZ ‘Big 4’ growth rates - Germany 57.3, Italy 56.0,
Spain 55.2 & France 78-mth high of 60.3 • UK composite slips to 54.7 due to services (53.8). Construction
hits a 5-mth high of 53.1 & manufacturing at 51-mth high (58.2).• RoI business activity rebounds to a 3-mth high (57.7)• NI firms’ report an acceleration in growth rates for output (54.3)
orders (55.5) & jobs (53.5). But profit margins being squeezed with input cost inflation accelerating to 6-mth highs.
• Retail the fastest growing sector in NI for the 3rd month running
November 2017 PMIs – Key highlights
Global output growth remains at 2½-year high with manufacturing output growth at an 80-month high
The Eurozone & China show an improvement in November with the US, UK & Japan report a slowdown
Divergence between Developed Markets PMI growth rate and Emerging Markets narrowing slightly
Emerging Markets’ growth rate boosted by China and Russia. But Brazil is in contraction mode & India slowing
Chinese services PMI hits a 3-mth high but manufacturing activity at a 5-mth low
Eurozone output accelerating with France the star performer in November
Eurozone posts an acceleration in output growth in retail, services and manufacturing
PMI suggests another strong quarter of EZ economic growth in Q4
France & Russia top the service sector growth league with India & Brazil in contraction mode
Eurozone & Japan see an acceleration in manufacturing activity. While some easing with US & Chinese firms
Developed Markets outperforming Emerging Markets
NI & RoI firms report faster rates of growth in November
PMI more positive than Composite Index. Latter includes hefty falls in manufacturing output due to closure of JTI plant.
2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015, 2016 & 2017 ytd
New orders & employment growth rates accelerate in Q4* relative to Q3. Export & output growth eases
NI firms report an acceleration (slight) in the pace of expansion in activity, new orders & employment
NI new orders growth accelerates. While UK & RoIfirms signal a stabilisation in orders growth
Backlogs of work mounting amongst NI firms
NI export orders growth accelerates off its 14-mth low
NI’s rate of employment growth quickens and remains above the UK’s for third successive month
NI’s private sector firms remain in hiring mode in Q3 & Q4*
Squeeze on profit margins intensifies in Q4
Regional Comparisons
North West & Wales top the regional growth table with Scotland at the bottom
The North East, South West & Scotland post the slowest rates of growth in the 3 months to November
The West Midlands reported the fastest growth rate over the last 12 months with Scotland the slowest
NI’s pace of job creation remains above the UK average and 5 other regions
NI’s employment growth rate outperforming 7 UK regions over the last 3 months
Scotland & the North East have reported the weakest rates of jobs growth over the last year. NI in line with UK
SectoralComparisons
Services activity eases while manufacturing & construction output growth accelerates markedly
PMI suggests a slight pick-up in economic growth in Q4
RoI construction and manufacturing firms report a marked acceleration in output growth
Retail & construction sector experience the biggest improvement in activity in Q4* relative to Q3
Retail records the fastest rates of growth followed by services, then manufacturing. Construction rising too.
Construction jobs accelerating sharply with hiring in services strong. Manufacturing staffing levels unchanged
Inflationary pressures intensifying across all sectors bar construction
NI’s manufacturing firms still report strong rates of growth in orders but employment growth flat
NI manufacturing output growth continues but at a much more subdued rate than in the UK and the RoI
NI manufacturing output growth (last 3 months) remains below its pre-downturn long-term average
UK, RoI & NI firms all report an acceleration in new orders growth
A strong €uro is not having a negative impact on EZ manufacturing output with Italy, RoI & France booming
£ weakness exacerbated input cost inflation. NI/UK input cost inflation rebounds from July’s 13-mth low
Input & output cost inflation hit record highs in Q1. But significant easing in Q2/Q3. Picking-up again in Q4
UK & RoI manufacturing firms report a pick-up in the pace of job creation while NI manufacturing flat
NI’s services sector expansion remains robust
NI & RoI service sectors report a deceleration in output growth but pace of expansion above the UK
The growth rate in NI’s services sector moving away (below) from its pre-downturn long-term average
New orders growth rate eases for RoI, UK & NI firms
Input cost inflation continues to pick-up again with output price inflation at a 21-mth high
NI firms increasing staffing levels at a robust rate and at a much faster pace than their UK counterparts
Retail sales & orders accelerating sharply while employment growth has flattened
NI retailers report a marked acceleration in their price rises due to cost pressures
NI’s construction firms report faster rates of growth in new orders, output and employment
Input cost inflation remains high with firms increasing prices at a much weaker rate
NI firms report a pick up in output growth and at a faster rate than UK firms. Both continue to lag the RoI
NI firms report faster rates of growth in new orders whilst growth in UK order books remains broadly flat
UK firms report a continued drop in commercial & civil engineering activity. Housebuilding remains strong
Construction sector still reporting a shortage of sub-contractors with rates charged rising
Optimism amongst UK construction firms remains below its long-run average
RoI housing & commercial construction activity reasonably but civil engineering activity still contracting
RoI’s construction firms still reporting a decline in the availability of sub-contractors & rising rates of pay
RoI construction firms still remain very optimistic about the year ahead & well above the long-term average
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