Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

April 2016 Survey Update

Issued 9th May 2016

Richard RamseyChief Economist Northern Ireland

www.ulstereconomix.comrichard.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 output growth improves in April due to services but manufacturing’s rate of expansion slows

China, Japan & the UK all report a notable deterioration in their PMIs in April with the US PMI improving

Developed Markets’ PMI improves in April but the equivalent survey for Emerging Markets stagnates

Emerging Markets’ PMI flat with Russia improving in April. India’s growth slows & Brazil’s recession continues

Chinese manufacturing and services PMIs both deteriorate in April

Diverging sector performance ‘Down Under’

France stagnant with Italy & Spain posting a pick-up in growth. Growth rate eases for UK, RoI & Germany

EZ manufacturing output growth eases with retail’s contraction accelerating but services growth continues

Following an easing in growth in H2-15, Eurozone GDP picked up in Q1-16 but composite PMI signals low gear

The Republic of Ireland and Northern Ireland continue to post the fastest rates of service sector output growth

Manufacturing PMIs for China, the US and Japan deteriorate in April with the Eurozone bucking the trend

Developed Markets still outperform Emerging Markets. The latter dips back below 50 for 12th time in 13 months

Denmark, Switzerland & Australia record the fastest rates of manufacturing output growth. BRICS still struggling

All economies report a slowdown in output growth

PMI suggests private sector growth stabilises in Q4-15, accelerates in Q1 2016 but eases in April

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 but growth slowed

Output & orders growth eases in Q2* relative to Q1 with exports & employment growth accelerating

NI firms reported an easing in new orders and output growth while rates of job creation accelerate

NI firms report a pick-up in new orders growth but still lagging behind the RoI. UK new orders growth eases

NI & RoI firms still reporting rising backlogs while their UK counterparts continue to post declines

NI export orders hit a 21-month high in April aided by sterling weakness & new business from the RoI

RoI jobs growth continues at a robust rate while NI and UK report similar rates of growth

Input cost and output price inflation accelerates

Regional Comparisons

The South West joins the North East in contraction territory with the East Midlands topping the league table

All UK regions bar Scotland & the North East posted growth in 3 months to April with NI top of the table

The RoI reported the fastest growth rate in business activity over the last year with Scotland the slowest

The North East, Yorkshire & Humberside and Scotland post job losses with NI’s rate of job creation above the UK average

Yorkshire & Humberside, Scotland & the North East report job losses in 3 months to April. NI above the UK average

Scotland and the North East posted the weakest rates of jobs growth over the last year with the RoI the strongest

SectoralComparisons

Growth remains subdued across all sectors

The UK’s growth rate slowed in Q1 to 0.4% and is expected to slow further in Q2 based on PMI

All sectors within the Republic of Ireland report an easing in their rates of growth in April

NI retailers & services firms posted a marked pick-up in business activity in Q1-16 with growth easing in Q2*

Services sector outperforms with robust output growth, construction slowing and manufacturing contracting

Rate of jobs growth eases within services & construction sectors while manufacturing job losses continue

NI’s manufacturing firms report a marked pick-up in orders with a pause in the recent series of job losses

NI manufacturing output contracts over the last 3 months with UK output slowing dramatically

NI firms report a return to orders growth with RoI and UK manufacturers reporting a marked slowdown

Manufacturing output contracts for NI and France in April with Greek output flat.

Higher wage costs (NLW introduced) are driving input costs higher with output price deflation continuing

Slowdown in global manufacturing is hitting employment levels most notably within the UK & NI

NI services sector experiences strong rates of growth in output and orders with rates of job creation easing

NI’s service sector output reports a marked acceleration in its growth rate with the UK equivalent slowing

The rate of growth in NI’s services sector accelerates to pre-downturn long-term average

NI firms report an easing in new orders growth after recent high with growth for RoI & UK firms

Input cost inflation picks up with output price rises continuing at a steady rate

NI & UK firms report an easing in the rate of service sector employment growth with RoI’s growth rate maintained

NI retailers continue to report strong demand in April after a strong Q1. Staffing levels rising at a rapid rate

NI retailers report a marked pick-up in input cost inflation while output prices continue to fall

NI’s construction firms still in expansion mode though rates of growth in output & employment are slowing

Input cost inflation accelerating with local firms enjoying a high degree of pricing power

Output growth for RoI firms eases from Q1 record high with a more significant slowdown for NI & UK firms

New orders growth decelerating markedly amongst NI & UK firms with orders growth still strong for RoI firms

UK firms report a slowdown in the rate of growth across all sectors but notably house building & commercial

UK sub-contractors remain in short-supply with rates charged still rising albeit at slower rates than in 2015

Optimism amongst UK construction firms has been falling and now below its long-term average

All aspects of RoI construction activity have reported a slowdown in their (still strong) growth rates

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 and well above the long-term average

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