Slide pack Ulster Bank NI PMI August 2015

transcript

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 2015 Survey Update

Issued 14th September 2015

Richard Ramsey Chief Economist Northern Ireland

www.ulstereconomix.com

richard.ramsey@ulsterbankcm.com Twitter @UB_Economics

PMI Surveys Purchasing 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 rate remains unchanged with services expanding but manufacturing output falls to a 28-month low

EZ manufacturing & services sector growth accelerates with retail sector’s growth easing & construction still contracting

The Eurozone’s composite PMI signals economic growth rate accelerating in Q3 2015

The UK & NI slip down the manufacturing output growth rankings with BRICS / Emerging markets not faring well

Australia, the Republic of Ireland & Spain posted the fastest rates of service sector output growth in August

Italy, Germany and Spain posted an acceleration in their respective growth rates in August

Composite PMIs for Japan & the Eurozone saw a pick-up in their growth rates in August

The US (ISM) & Chinese manufacturing PMIs posted the weakest growth rates in August

Chinese Composite PMI hits its lowest level since Feb-09

Alongside China, the PMIs for the Emerging Markets, Russia and Brazil are all signalling contraction

Australia’s services & manufacturing sectors signal a marked improvement in August, but will it last?

NI posts its 4th consecutive month of private sector growth but pace of growth eases & still lags behind the UK & RoI

PMI suggests growth in DFP’s private sector composite index during 2014 but recovery stalls in Q1-15 with a modest rebound in Q2 & Q3-15

2014 was the first year in 7 years that business activity, new orders, employment & export orders all expanded

NI Private Sector Performance (PMI)

2007 2008 2009 2010 2011 2012 2013 2014

PMI Index

Business Activity New Orders Employment Export Orders ExpansionC

ontraction

Source: Markit Economics & Ulster Bank NI

NI recovery took hold in H2-13, all indicators improved in H1-14 & eased in H2-14 with a further slowdown in H1-15

NI Private Sector Performance (PMI)

PMI Index

Business Activity New Orders Employment Export Orders

ExpansionC

ontraction

Source: Markit Economics & Ulster Bank NI PMI

NI firms report a pick-up in the pace of job creation but the growth rates for new orders & business activity slow

UK, RoI & NI firms continue to report growing order books but the pace of expansion has eased

Backlogs of work continue to grow amongst RoI & NI firms with levels of outstanding work amongst UK firms flat

Export orders are still struggling and not helped by the sterling / euro exchange rate

PMI signalled a slowdown in the pace of jobs growth in H2-14 but rebounds in H1-15

RoI firms maintain strong rates of jobs growth in August with NI reporting a marked pick-up in hiring

Inflationary pressures remain subdued and output prices are rising again

Regional Comparisons

All UK regions continue to post output growth in August

Most UK regions posted strong rates of growth in the last 3 months but rates of growth remain weak in Scotland & NI

The RoI reported the fastest rate of growth in business activity over the last 12 months & Scotland the slowest

The East of England & the RoI post the fastest rate of employment growth with Scotland & NI the slowest

NI & Scotland post the weakest rates of job creation within the UK over the last 3 months

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

Sectoral Comparisons

All of the UK PMIs came in weaker than expected in August with services signalling a marked slowdown

The UK posts strong rates of growth throughout 2014 & more recently in Q2-15. PMI suggests growth will ease in Q3

RoI output growth across all sectors eases in August

All sectors in NI experienced weaker rates of growth in H2-14 relative to H1-14 with H1-15 even weaker

NI Private Sector Business Activity (PMI)

PMI Index

Manufacturing Services Construction Retail ExpansionC

ontraction

Source: Markit Economics & Ulster Bank NI PMI

NI manufacturing & services firms report an easing in output growth in Q3 but contraction within construction continues

Services & manufacturing firms are still increasing their staffing levels whilst construction employment is falling

NI’s manufacturing firms appear to be experiencing a slowdown across all broad indicators

RoI firms maintain strong rates of output growth but rates of growth ease for both RoI and NI firms

NI firms report a more marked slowdown in manufacturing orders growth than their equivalents in the UK & RoI

All economies bar Spain saw output growth slow or contract (France & Greece) in August

Input cost inflation for manufacturers remains subdued with output prices still falling

PMI signals moderation in jobs growth in H2-14 & Q1-15 following record high in Q2-14, rebound in Q2-15 eases in Q3

Service sector experiences a pick-up in orders & employment growth but output growth slows

NI firms fail to match the robust rates of growth in the UK & RoI service sectors but output growth is still accelerating

RoI & NI firms report a marked pick-up in new orders growth whilst expansion within UK order books slows

NI’s services firms report a marked pick-up in input cost inflation with some pricing power returning

NI services firms increased their staffing levels over the last 3 months but below the rates of growth in the UK & RoI

Pace of job creation within the services sector eased in H2-14 but has picked up in H1-15 & accelerated in Q3-15

NI retailers report a significant increase in sales and new orders

NI retailers report a return of pricing power with output prices rising. Input costs fall for the 1st time in the survey

NI’s construction firms report a decline in activity, new orders and employment over the last three months

Input cost inflation remains subdued as pricing power returns to local construction firms

NI’s construction PMI posts jobs growth Q3-13 to Q2-15 but this is largely due to NI firms working outside of NI

Very strong rates of output growth amongst RoI firms, robust growth with UK firms & contraction amongst NI firms

NI orders decrease over last 3 months with UK growth stabilising. RoI firms still reporting robust rates of growth

UK firms post a pick-up in civil engineering & commercial activity with housing activity easing

UK sub-contractors remain in short-supply with the rates that they charge still rising albeit a weaker rate

Optimism amongst UK construction firms remains high

RoI’s construction activity experiences a marked slowdown in August across all sectors

RoI’s construction industry still reporting a decrease in the availability of sub-contractors & rising rates of pay

RoI construction firms remain very optimistic about the year ahead

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