Slide pack, Ulster Bank Northern Ireland PMI, August 2014
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Transcript of Slide pack, Ulster Bank Northern Ireland PMI, August 2014
Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
August 2014 Survey Update
Issued 8th
September 2014
Richard Ramsey
Chief 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 manufacturing & services output growth continues at a robust rate in August
Global Output - PMI
25
30
35
40
45
50
55
60
65
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
The EZ’s services & manufacturing sectors lose momentum with retail & construction still contracting
Eurozone PMIs: Output
25
3035
4045
50
5560
65
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Composite (M&S) Manufacturing Services
Construction Retail No Change
Source: Markit Economics Expansion
Contraction
The Republic of Ireland, the US and NI posted the fastest rates of manufacturing output growth in August
PMIs: Manufacturing Output August 2014
35 40 45 50 55 60 65 70 75
DenmarkFrance
AustraliaS.Africa
IndonesiaS.Korea
SingaporePolandTurkey
ItalyVietnam
BrazilEZEU
GermanyChina
RussiaGreeceMexicoJapan
NetherlandsSpain
AustriaUK
GlobalN.Zealand*
IndiaSwitzerland
Czech RepublicCanadaTaiwan
NIUS
Ireland
Source: Markit Economics Output Indices, *July
UK, NI & RoI
€
The Republic of Ireland, the UK & the US posted the fastest rates of service sector output growth in August
PMIs: Services Output August 2014
35 40 45 50 55 60 65
BrazilAustralia
ItalyJapan
FranceRussia
IndiaEmerging Markets
EZChina
EUGermany
NIGlobalSpain
US*UK
Ireland
Source: Markit Economics Output Indices
€
German growth slowing, Italy & France contracting and Spain, Ireland & the UK posting an acceleration in growth
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Source: Markit Economics PMIs
Contraction
Expansion
The UK & Chinese Composite PMIs improve in August
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Eurozone US (Markit) China UK
Source: Markit Economics PMIs, US begins Jul-11
ExpansionC
ontraction
The US recovery accelerates with Japan also reporting a quickening in manufacturing activity
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
Emerging markets post their strongest rate of growth in 17 months due primarily to a pick-up in China
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
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
Firms in the UK & RoI signal an acceleration in their rates of growth in output but NI’s pace of growth eases
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-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, * average of July & August
50 mark is the threshold for expansion / contraction with PMI Expansion
ContractionE i
NI’s recovery took hold in the second half (H2) of 2013 with all indicators improving in (H1) 2014
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
65
2007
H120
07H2
2008
H120
08H2
2009
H120
09H2
2010
H120
10H2
2011
H120
11H2
2012
H120
12H2
2013
H120
13H2
2014
H1
PMI Index
Business Activity New Orders Employment Export Orders ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
The pace of growth in employment, new orders & output amongst NI firms eased in August from its recent highs
NI Private Sector Activity3 month moving average
30
35
40
45
50
55
60
65
70
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
NI order books were growing at a record rate in May but the pace of growth has eased since then
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Surge in demand has led to rising backlogs of work notably within NI although rates of growth is now easing
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 14th successive monthly rise in export orders in August but the pace of growth slows
NI New Export Business3 month moving average
25
30
35
40
45
50
55
60
65
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-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* refers to average of July & August
Job creation accelerates in the RoI with the pace of employment growth easing in NI & the UK
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Output cost inflation remains subdued
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Aug-04 Aug-06 Aug-08 Aug-10 Aug-12 Aug-14
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services rising
Regional Comparisons
Strong growth across all UK regions & the RoI in August
Output / Business ActivityAugust 201450 = No change
56.7
61.7
59.8
40
45
50
55
60
65
70
NW Y&H NE East EM UK SE Lon Wal SW WM NI Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
…all the UK regions & the RoI post strong rates of growth over the last 3 months…
Output / Business Activity 3 months to August 2014
50 = No change
58.559.060.6
40
45
50
55
60
65
70
NE EM SE NW Wal Y&H East UK Lon NI SW WM Scot RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity12 months to August 2014
50 = No change
58.8 58.659.4
44
47
50
53
56
59
62
65
Lon SE SW EM UK NE NW East Wal WM NI Y&H Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
NI posts further job gains in August but rate of employment growth lags behind the UK and the RoI
Employment LevelsAugust 201450 = No change
55.1
57.6
53.7
46
48
50
52
54
56
58
60
WM SW Y&H UK East Scot EM NW SE NI Wal 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 Levels3 months to August 2014
50 = No change
56.8
54.2
57.2
46
48
50
52
54
56
58
60
East WM SE UK Y&H NW Lon EM SW NI Scot Wal NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
The RoI, London & the North West posted the sharpest rise in employment levels over the last year
Employment Levels12 Months to August 2014
50 = No change
55.7
54.1
56.4
46
48
50
52
54
56
58
Lon NW East UK SE SW Y&H WM NI Scot EM Wal NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK services & construction sectors exceed expectations with growth accelerating. But manufacturing disappoints
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth between Q2 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, * refers to average for July & August
RoI output growth accelerates within services & manufacturing but eases within the construction sector
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
70
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
NI’s services & construction firms reported stronger rates of growth in output in H1 2014 relative to H2 2013
NI Private Sector Business Activity (PMI)
30
35
40
45
50
55
60
65
2007
H120
07H2
2008
H120
08H2
2009
H120
09H2
2010
H120
10H2
2011
H120
11H2
2012
H120
12H2
2013
H120
13H2
2014
H1PMI Index
Manufacturing Services Construction Retail
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI’s services and construction sectors saw output accelerate in Q2 relative to Q1 but Q3 set to be weaker
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
70
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
…with all sectors 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
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
Manufacturing Services Construction
Source: Markit Economics &Ulster Bank NI PMI
Job Gains
Job Losses
Local firms report strong rates of growth in output & orders. Pace of jobs growth eases from recent record high
NI Manufacturing Activity - PMI3 month moving average
25
30
35
40
45
50
55
60
65
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank
Grow
th C
ontraction
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Aug-04 Aug-06 Aug-08 Aug-10 Aug-12 Aug-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI & RoI post a pick-up in their manufacturing output growth rates in Q3 while the pace of growth eases in the UK
NI & the RoI post a pick-up in their manufacturing new orders growth rates in Q3
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-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
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
RoI Italy Spain Greece NI
Source: Markit Economics PMIs
Contraction
Expansion
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
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
The PMI is signalling the fastest rate of manufacturing employment growth in Q1 & Q2 since the PMI began
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* refers to average of July & August
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
Aug-03 Jun-05 Apr-07 Feb-09 Dec-10 Oct-12 Aug-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
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-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
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Service sector posts its 3rd successive monthly rise in output prices in August
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Service sector employment growth remains strong across all 3 economies with NI jobs growth easing
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Aug-04 Aug-06 Aug-08 Aug-10 Aug-12 Aug-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* refers to average of July & August
NI retailers report a 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
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-14
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Local retailers report an easing in rates of output cost inflation and input price inflation
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Aug-04 Apr-06 Dec-07 Aug-09 Apr-11 Dec-12 Aug-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
Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-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
Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-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* refers to average of July & August
Construction output growth remains strong in all three economies in Q3
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
70
Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
NI new orders growth hits a record high in Q2 & remains strong in Q3 suggesting significant work in the pipeline
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms. Housing activity has increased over the last 3 months at its fastest rate since June 1997
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13 Aug-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
Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 57
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