Post on 07-Dec-2014
description
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 2014 Survey Update
Issued 13th
October 2014
Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com
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 manufacturing & services output growth eases in September
Global Output - PMI
25
30
35
40
45
50
55
60
65
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
The EZ’s services sector loses momentum with retail & construction still contracting
Eurozone PMIs: Output
25
3035
4045
50
5560
65
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Composite (M&S) Manufacturing Services
Construction Retail No Change
Source: Markit Economics ExpansionC
ontraction
The EZ’s composite PMI has suggested economic growth in Q2 & Q3 whereas GDP was flat in Q2
EZ GDP versus EZ Composite PMIComposite excludes construction
2025303540455055606570
2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3
PMI Index
-3-2.5-2-1.5-1-0.500.511.52
GDP % Q/Q
GDP Q/Q PMI
Source: Bloomberg & Markit Economics
EZ Q2-14 GDP 0%
After New Zealand*, Northern Ireland firms posted the fastest rates of manufacturing output growth
PMIs: Manufacturing Output September 2014
35 40 45 50 55 60 65 70 75
AustraliaS.Korea
AustriaFrancePoland
BrazilGreece
IndonesiaEZ
GermanySingapore
EUTurkey
VietnamChina
ItalyUK
RussiaIndia
NetherlandsS.Africa
GlobalJapan
MexicoSpain
CanadaDenmark
TaiwanSwitzerland
Czech RepublicIreland
USNI
N.Zealand*
Source: Markit Economics Output Indices, *August
UK, NI & RoI
€
The Republic of Ireland, UK, US & NI posted the fastest rates of service sector output growth in September
PMIs: Services Output September 2014
35 40 45 50 55 60 65
AustraliaFrance
ItalyRussia
BrazilIndia
EZJapan
Emerging MarketsChina
EUGlobal
GermanySpain
Developed MarketsNI
UKUS*
Ireland
Source: Markit Economics Output Indices
€
Spain, Ireland & the UK post a slowdown in growth in September with Italy & France in contraction mode
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Source: Markit Economics PMIs
Contraction
Expansion
The US, UK, EZ & Chinese Composite PMIs all record an easing in their growth rates in September
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Eurozone US (Markit) China UK
Source: Markit Economics PMIs, US begins Jul-11
ExpansionC
ontraction
The US continues to enjoy a robust manufacturing recovery remains whilst the EZ approaches stagnation
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
Emerging markets post their strongest rate of growth in 18 months due primarily to a pick-up in India & Brazil
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Brazil Russia India Emerging Markets
Source: Markit Economics
Contraction
Expansion
Australia’s services & manufacturing sectors remain ‘Down Under’ the 50 threshold in August
Australia - PMI
30
35
40
45
50
55
60
65
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
Firms in the UK & RoI signal an easing in their rates of growth in output but NI’s pace of growth picks up
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
NI UK RoI
Source: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests growth in DFP’s private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q1-Q3 2014
NI Private Sector Output Index Versus NI PMI
-6-5-4
-3-2-1012
345
2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1 2014 Q3
NICEI Q/Q%
30
35
40
45
50
55
60
65
PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: DFP NI Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI,Q1 2014 is latest data for NICEI
50 mark is the threshold for expansion / contraction with PMI Expansion
ContractionE i
NI’s recovery took hold in H2 of 2013 with all indicators improving in H1 2014 but easing in Q3 2014
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
65
2006
H220
07H1
2007
H220
08H1
2008
H220
09H1
2009
H220
10H1
2010
H220
11H1
2011
H220
12H1
2012
H220
13H1
2013
H220
14H1
2014
Q3
PMI Index
Business Activity New Orders Employment Export Orders
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
The pace of growth in employment & output amongst NI firms picks up in September but new orders growth slips
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
RoI order books are growing at their fastest rate in >14 yrs but the pace of growth slips to an 11-mth low in NI
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Following a surge in backlogs of work, notably within NI, outstanding work eases to a 12-mth low in September
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 15th successive monthly rise in export orders in September but the pace of growth slows
NI New Export Business3 month moving average
25
30
35
40
45
50
55
60
65
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Grow
th Accelerating
Contraction A
ccelerating
PMI signals the fastest rate of jobs growth in 7 years in Q2 with the pace of job creation easing in Q3
NI Employment: PMI v QES*
35
40
45
50
55
60
2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3
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
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector
Discontinuity in QES Series
Job Losses
Job gains
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction
Job creation accelerates in the RoI, UK and NI in September with the RoI posting the fastest rate of growth
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Output cost inflation remains very subdued
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services
Regional Comparisons
Strong growth across most UK regions & the RoI with Scotland posting the weakest growth rate in September
Output / Business ActivitySeptember 2014
50 = No change
58.1 57.4
60.1
40
45
50
55
60
65
70
East Y&H WM UK NW SE NI NE Lon EM Wal SW Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
…most of the UK regions & the RoI post strong rates of growth over the last 3 months…
Output / Business Activity Q3 2014
50 = No change
58.0
60.758.9
40
45
50
55
60
65
70
NE East EM Y&H NW SE UK Lon Wal NI WM SW Scot RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity12 months to September 2014
50 = No change
59.2 58.958.7
44
47
50
53
56
59
62
65
Lon SE EM SW NE East UK WM NW Wal NI Y&H Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
NI posts further job gains in September lags behind the UK & the RoI. The North East posts job losses
Employment LevelsSeptember 2014
50 = No change
55.5
57.8
53.8
46
48
50
52
54
56
58
60
Y&H East SW WM UK NW Wal EM SE Scot NI Lon NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Most UK regions (including NI) and the RoI post strong rates of employment growth over the last 3 months
Employment LevelsQ3 2014
50 = No change
55.7
57.4
53.9
46
48
50
52
54
56
58
60
WM East Y&H SW UK SE NW EM Lon Scot NI Wal NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
The RoI, London & the North West posted the sharpest rises in employment levels over the last year
Employment Levels12 Months to September 2014
50 = No change
55.8
54.3
56.7
46
48
50
52
54
56
58
Lon NW East SW UK SE Y&H WM NI EM Scot Wal NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK services & manufacturing disappointing expectations with only construction posting an acceleration in growth
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth between Q1 2013 & Q2 2014 with further growth expected in Q3
UK GDP versus UK Composite PMIUK Composite includes Construction
25
30
35
40
45
50
55
60
65
2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3
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
RoI output growth accelerates within services & construction but eases within the manufacturing sector
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
70
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
NI’s manufacturing & construction firms reported stronger rates of growth in output in Q3-14 than H1-14
NI Private Sector Business Activity (PMI)
30
35
40
45
50
55
60
65
2006
H220
07H1
2007
H220
08H1
2008
H220
09H1
2009
H220
10H1
2010
H220
11H1
2011
H220
12H1
2012
H220
13H1
2013
H220
14H1
2014
Q3
PMI Index
Manufacturing Services Construction Retail ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI’s services & construction sectors saw output growth ease in Q3 relative to Q2
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
70
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
…with construction & services reporting an easing in the rates of employment growth over the last 3 months
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
NI’s manufacturing firms report an acceleration in output and new orders growth in Q3
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
70
Sep-03 Jul-05 May-07 Mar-09 Jan-11 Nov-12 Sep-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
NI & RoI post a pick-up in their manufacturing output growth rates in Q3 while the growth rate eases markedly in the UK
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Manufacturing new orders growth rates accelerates in NI in Q3 but eases significantly in the UK
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI has been outperforming some of its European competitors for most of the last 12 months
Manufacturing Output - PMI
20
30
40
50
60
70
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
RoI Italy Spain Greece NI France
Source: Markit Economics PMIs
C
ontractionExpansion
Pricing power eases as NI manufacturing firms report the weakest output price inflation since 2012
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
The PMI is signalling a moderation in manufacturing employment growth in Q3 following record high in Q2
NI Manufacturing Employment: PMI v QES*
30
35
40
45
50
55
60
65
2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
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 firms
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction
Service sector experiences a slowdown in its rates of growth in output, employment & new orders in Q3
NI Service Sector (excludes Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Sep-03 Jul-05 May-07 Mar-09 Jan-11 Nov-12 Sep-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
UK & RoI firms report an acceleration in their rates of output growth whilst output growth for NI firms eases
Services Output (excluding Retail)3 month moving average
30
40
50
60
70
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…but NI firms report a marked slowdown in the rate of new orders growth in Q3
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI’s service sector posts a decline in output prices in September & input cost inflation eases to a 27-month low
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Service sector employment growth eases in NI & UK in Q3 but remains strong in the RoI
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
In Q2 the services PMI showed its fastest rate of jobs growth since Q4 2007. Pace of job creation eases in Q3
NI Services Employment: PMI v QES*
40
45
50
55
60
65
2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3
PMI Index
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
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 and includes the public sector
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction
NI retailers report a much, much weaker Q3 relative to a bumper Q2 (boosted by Giro D’Italia)
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
Local retailers report their first fall in output prices in 5 years in September
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Sep-04 May-06 Jan-08 Sep-09 May-11 Jan-13 Sep-14
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Following Q2’s record rates of growth, NI’s construction firms report a slight easing in their rates of growth in Q3
NI Construction PMI3 month moving average
20
30
40
50
60
70
Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…and output price inflation has eased while input cost inflation has accelerated in Q3
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
PMI Index
Input Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
InflationD
eflation
NI’s construction PMI posts its 5th successive quarterly rise in employment in Q3 but QES shows a fall in Q1
NI Construction Employment: PMI v QES*
20
25
30
35
40
45
50
55
60
65
2004 Q3 2007 Q1 2009 Q3 2012 Q1 2014 Q3
PMI Index
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
Q/Q
PMI Employment Index No Change QES Q/Q
Discontinuity in QES Series
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 Economics, PMI Index 50.0 denotes threshold between expansion / contraction
Construction output growth remains strong in all three economies in Q3
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
70
Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
NI new orders growth eases from record high & remains strong in Q3 suggesting significant work in the pipeline
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms. Housing activity has recently increased at its fastest rate since June 1997
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 Sep-14
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
…with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 58
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