Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

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

May 2017 Survey Update

Issued 13th June 2017

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 (53.7) just shy of January’s 13-mth high• Growth accelerates in US, France, Germany & Japan• Chinese composite PMI picks up from 7-mth low to 51.5• Russia, India & China propel Emerging Markets PMI to 52.2• Eurozone composite PMI unchanged at 56.8 a 6-yr high • Italian (55.2) & Spanish (57.2) PMIs ease from their recent

highs but still record robust rates of growth• Developed Market manufacturing PMI (54.1) remains just shy

of recent 35-mth high• UK composite PMI (54.5) slows to a 3-mth low. Most regions

post slower growth rates with East Midlands in top spot 57.9• RoI business activity accelerates to a 4-mth high (58.8)• NI firms’ output growth slows 53.5 but employment growth

accelerates to a 13-mth high. Inflationary pressures ease

May 2017 PMIs – Key highlights

Global output growth rate remains steady with services at a 4-mth high & manufacturing at a 6-mth low

Growth accelerates in the US, China & Japan with EZ maintaining its robust rate of growth. UK slowing.

Developed Markets PMI growth rate unchanged in May with a slight improvement for Emerging Markets

Emerging Markets’ growth rate accelerates due to China, India & Russia. Brazil expands for 2nd time

Chinese services PMI rebounds from a 11-month low with manufacturing activity slowing to an 11-month low

Germany & France at 6 year highs. Spain maintains a strong growth rate while Italy & UK report slower rates

Growth in EZ services, manufacturing & construction output at or close to 6-year highs

Early indications from the PMI suggests EZ may see an acceleration in Q2 economic growth

Ireland, Spain & France top the service sector growth league with Brazil back in contraction mode again

Euro-zone & Japanese manufacturing activity accelerates with China dipping to an 11-mth low

Developed Markets continue to outperform Emerging Markets with the latter slipping to an 8-mth low

NI & UK firms report slower rates of growth in May

PMI suggests private sector growth stalls in Q3, rebounds in Q4 with momentum retained into Q1/Q2

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 & 2016 (& H1* 2017)

Export orders & employment growth rates quicken in Q2* relative to Q1 with new orders slowing slightly

NI firms report a pick-up in orders & jobs growth while the rate of business activity slows

RoI & NI firms’ orders growth quickens with UK firms reporting a slowdown in the rate of growth

NI firms no longer report rising backlogs

NI export orders growth accelerates to a 4-month high

NI’s rate of employment growth exceeds the UK for 4th

month in a row. Both NI & UK lag behind the RoI

Input and output cost inflation eases from their recent multi-year highs

Regional Comparisons

East Midlands & Yorkshire & Humber top the regional growth table with Scotland & the North East at the bottom

Scotland, the North East & NI post the weakest growth rates of all the UK regions in the 3 months to May

The RoI reported the fastest growth rate in the last year with Scotland close to stagnation

NI reports the 6th fastest rate of job creation in the UK with Scotland the only region not posting growth

NI private sector employment growth outperforming the UK average over the last 3 months

Scotland & the North East (job losses) have reported the weakest rates of jobs growth over the last year

SectoralComparisons

UK construction output growth accelerates while manufacturing & services output growth slows

PMI suggests that UK economic growth could rebound in Q2 following a very disappointing Q1

All sectors within the RoI bar services reported faster rates of growth in May

Unlike retail & construction, NI manufacturing & services post faster rates of growth in Q2*

Service sector & manufacturing growth accelerates with retail slowing. Construction activity remains subdued

Construction, manufacturing & services firms report a pick-up in staffing levels in the 3 months to May

NI’s manufacturing firms report faster rates of growth in output in the 3-mths to May

NI, UK & RoI manufacturing firms reporting a pick-up in activity in the 3 months to May

NI manufacturing output growth in line with its pre-downturn long-term average after recent Q4 high

Rate of growth in UK new orders accelerates while pace of expansion remains steady for NI & RoI firms

Manufacturing output accelerates for Spanish, RoI& NI firms

Sterling weakness has exacerbated input cost inflation in NI & UK. Though inflationary pressures are easing

Input cost inflation hits a record high in Q1 with firms also raising prices at a record rate. Some easing in Q2

NI, UK & RoI manufacturing firms report a pick-up in employment growth over the last 3 months

Output, new orders & employment growth rates across NI’s services sector quickens over the last 3 months

NI services sector output growth accelerates in May. Now in line with UK but both still lag the RoI

The growth rate in NI’s services sector remains well below its pre-downturn long-term average

New orders growth rate accelerates for NI & UK services but still lags well behind their RoI counterparts

Input cost inflation accelerates to a near 6-year high with output prices inflation more subdued

NI firms hiring at an accelerating rate in the 3-mths to May but both NI & UK lagging well behind the RoI

Slowdown within retail sector is evident across all sectors though employment growth continues

NI retailers report an easing in inflation rates relative to their recent highs

NI’s construction firms increasing their staffing levels but new orders are contracting again

Input cost inflation remains high with firms increasing prices at a much weaker rate

NI firms report subdued rates of growth with their RoI & UK counterparts posting faster rates of growth

NI firms report falling orders whilst growth accelerates for UK & RoI firms

UK firms report an acceleration in housing & commercial activity

Construction sector still reporting a shortage of sub-contractors

Optimism amongst UK construction firms remains broadly in line with its long-term average

RoI housing & commercial construction activity accelerates while engineering output returns to growth

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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