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Ulster Bank NI Slide Pack November 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

    November 2017 Survey Update

    Issued 11th December 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 remains at 2-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 2-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

  • NIs rate of employment growth quickens and remains above the UKs for third successive month

  • NIs 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

  • NIs pace of job creation remains above the UK average and 5 other regions

  • NIs 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

  • NIs 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 Julys 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

  • NIs 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 NIs 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

  • NIs 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

  • RoIs 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

  • Slide 67


    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 contained here without seeking specific advice on mat

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