Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
March 2014 Survey Update
Issued 14th
April 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 output begins 2014 on a firmer footing than it started 2013 but manufacturing growth eases in March
Global Output - PMI
25
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
The Eurozone started 2013 will all sectors contracting now only construction is waiting for a return to growth
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics ExpansionC
ontraction
Most economies post manufacturing output growth in March
PMIs: Manufacturing Output March 2014
35 40 45 50 55 60 65 70 75
ChinaRussia
AustraliaIndonesia
S.KoreaSingapore
S.AfricaBrazil
AustriaMexicoTurkey
IndiaVietnam
FranceCanada
GlobalGreece
SpainJapan
TaiwanNI
EZPoland
ItalyUSEU
NetherlandsIreland
GermanyUK
SwitzerlandN.Zealand*
Czech RepublicDenmark
Source: Markit Economics Output Indices, *February. For the US ISM is used.
UK, NI & RoI
€
The Republic of Ireland & Northern Ireland posted the fastest rates of service sector output growth in March
PMIs: Services Output March 2014
35 40 45 50 55 60 65
IndiaRussia
AustraliaItaly
Emerging MarketsBrazil
FranceChinaJapan
EZGermany
US*Global
EUSpain
UKNI
Ireland
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
France, Spain & Ireland see growth accelerate in March while Germany, UK & Italy see growth ease
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Source: Markit Economics PMIs
Contraction
Expansion
The US was the only Composite PMI to improve in March
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Eurozone US (ISM) China UK
Source: Markit Economics PMIs, US includes construction
ExpansionC
ontraction
The US saw its PMI rebound after the adverse weather conditions in January & February
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
Emerging markets slowdown continues. Russian PMI is contracting at its fastest rate since May 2009…
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Brazil Russia India Emerging Markets
Source: Markit Economics
Contraction
Expansion
Australia’s services & manufacturing sector ‘Down under’ the 50 threshold in March
Australia - PMI
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
The UK & NI see their growth rates ease in March with the RoI firms signalling a pick-up in their growth rates
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-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 new private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q4 & Q1-14
NI Private Sector Output Index Versus NI PMI
-6-5-4
-3-2-1012
345
2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3 2014 Q1
PSO Q/Q%
30
35
40
45
50
55
60
65
PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: New DFP Northern Ireland Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI’s recovery took hold in the second half (H2) of 2013
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
2007
H120
07H2
2008
H120
08H2
2009
H120
09H2
2010
H120
10H2
2011
H120
11H2
2012
H120
12H2
2013
H120
13H2
PMI Index
Business Activity New Orders Employment Export Orders ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI
NI firms report an easing in rates of output growth but employment growth & new orders growth accelerates
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Buoyant order books suggest more growth in the months ahead. But pace of UK growth slowing from a strong position
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Surge in demand has led to backlogs of work particularly within the UK & NI
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 9th successive rise in export orders
NI New Export Business
20
30
40
50
60
70
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
PMI for Q1 signals fastest rate of jobs growth in 7 years
NI Employment: PMI v QES*
35
40
45
50
55
60
2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1
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
UK & RoI firms report an easing in rate of job creation while employment growth expands at a record rate for NI firms
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Input & output cost inflation eases over the 3 months to March
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-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 March
Output / Business ActivityMarch 2014
50 = No change
56.658.1
59.1
40
45
50
55
60
65
70
Wal Lon SW East WM EM UK SE NE NI Scot NW Y&H 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 March 2014
50 = No change
58.457.3
58.6
40
45
50
55
60
65
70
WM SW SE Wal East Lon UK NI NW Y&H EM NE Scot RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity12 months to March 2014
50 = No change
55.6
58.3
55.9
40
45
50
55
60
65
Lon SE SW NW UK WM Wal EM East Y&H Scot NI NE RoI
PMI Index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI posts the fastest rate of employment growth of all the UK regions and slightly below that of the RoI
Employment LevelsMarch 201450 = No change
56.6
54.4
56.9
46
48
50
52
54
56
58
60
62
NI NW Y&H UK SW East Wal Scot Lon SE NE EM WM RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
All UK regions and the RoI post employment growth over the last 3 months
Employment Levels3 months to March 2014
50 = No change
55.3 55.1
56.6
46
48
50
52
54
56
58
60
NW SW Lon UK East Y&H NI SE Scot NE Wal WM EM RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
In 2013 NI posted its 1st annual increase in private sector employment since 2007 with trend continuing in 2014
Employment Levels12 Months to March 2014
50 = No change
53.754.6
51.8
46
48
50
52
54
56
58
SW Lon NW WM East UK SE Scot Wal Y&H NI NE EM RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
All sectors post strong growth in March although manufacturing & services lose some momentum
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth in Q2-Q4 with further growth expected in Q1 2014
UK GDP versus UK Composite PMIUK Composite includes Construction
25
30
35
40
45
50
55
60
65
2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1
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 across all sectors in March
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
70
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
All 3 broad sectors within NI saw a marked turnaround in business activity in 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
PMI Index
Manufacturing Services Construction Retail
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI
All 3 broad sectors within NI continue to report robust rates of output growth in Q1 2014
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
with all sectors reporting employment growth over the last 3 months with manufacturing & construction at record rates
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
NI manufacturing firms report an easing in output & orders but a surge in job creation
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Mar-03 Jan-05 Nov-06 Sep-08 Jul-10 May-12 Mar-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
UK & NI manufacturing firms continue to post strong rates of growth in output during the last 3 months
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The UK posts the strongest rate of growth in new orders, albeit slowing, while RoI & NI post a pick-up in orders growth
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI has been outperforming some of its European competitors
Manufacturing Output - PMI
20
30
40
50
60
70
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
RoI Italy Spain Greece NI
Source: Markit Economics PMIs
Contraction
Expansion
NI manufacturers post the slowest rate of input cost inflation in March in 21 months
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
In Q1 2014, PMI signals the fastest rate of manufacturing employment growth since the survey began
NI Manufacturing Employment: PMI v QES*
30
35
40
45
50
55
60
65
2003 Q1 2005 Q4 2008 Q3 2011 Q2 2014 Q1
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 expansion in output & employment in March
NI Service Sector (excludes Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Mar-03 Jan-05 Nov-06 Sep-08 Jul-10 May-12 Mar-14
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
All 3 economies post strong rates of growth in services output in March with the RoI leading the way …
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
… and new orders growth remains strong too
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Input cost & output price inflation ease within service sector firms in March with pricing power negative
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Service sector employment growth accelerates within the RoI & NI over the last 3 months to March
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
In Q1 the services PMI showed its fastest rate of jobs growth since Q4 2007
NI Services Employment: PMI v QES*
40
45
50
55
60
65
2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1
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 marked slowdown in sales and new orders in March from its recent highs
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Local retailers maintain pricing power in March
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
NI construction sector continues to report growth in output, new orders & employment over the last 3 months
NI Construction PMI3 month moving average
20
30
40
50
60
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…and output prices have been rising at a record rate
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
PMI Index
Input Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
InflationD
eflation
NI’s construction PMI posts its third successive quarterly rise in employment in Q1 2014
NI Construction Employment: PMI v QES*
20
25
30
35
40
45
50
55
60
65
2004 Q1 2006 Q3 2009 Q1 2011 Q3 2014 Q1
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 particularly within the UK
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
70
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
NI new orders growth hits a record high in March and suggests significant work remains in the pipeline
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms within GB. House building has recently been expanding at its fastest rate in over 11 years
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-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
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 57
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