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 2015 Survey Update Issued 8 th June 2015 Richard Ramsey Chief Economist Northern Ireland www.ulstereconomix.com [email protected]Twitter @UB_Economics
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Slide pack for the Ulster Bank Northern Ireland PMI, May 2015
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Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
Australia’s services & manufacturing sectors on opposite sides of the 50 threshold in May
Australia - PMI
30
35
40
45
50
55
60
65
May-07 May-09 May-11 May-13 May-15
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
NI posts its fastest rate of output growth in 7 months but continues to lag behind the UK & RoI
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
May-03 May-05 May-07 May-09 May-11 May-13 May-15
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 throughout 2014 but recovery stalls in H1 2015
NI Private Sector Output Index Versus NI PMI
-6-5-4-3-2-1
012345
2005 Q2 2007 Q2 2009 Q2 2011 Q2 2013 Q2 2015 Q2*
NICEI Q/Q%
30
35
40
45
50
55
60
65PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: DFP NI Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI,Q2 2014 is latest data for NICEI.*Q2 refers to average of April & May for the PMI only
50 mark is the threshold for expansion / contraction with PMI Expansion
Contraction
2014 was the first year in 7 years that business activity, new orders, employment & export orders all expanded
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
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. Exports & business activity fell in H1-15
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
65
2006
H220
07H1
2007
H220
08H1
2008
H220
09H1
2009
H220
10H1
2010
H220
11H1
2011
H220
12H1
2012
H220
13H1
2013
H220
14H1
2014
H220
15H1*
PMI Index
Business Activity New Orders Employment Export Orders
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI, * refers to 5 months to May 2015
NI firms report a marked pick-up in business activity and new orders with employment growth continuing
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
May-03 May-05 May-07 May-09 May-11 May-13 May-15
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
UK & RoI continue to report robust rates of orders growth while NI firms post modest rates of expansion
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
May-03 May-05 May-07 May-09 May-11 May-13 May-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Backlogs of work continue to grow in the UK & RoI but NI posts an 8th month of contraction
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
May-03 May-05 May-07 May-09 May-11 May-13 May-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
Export orders flat or falling in each of the last 7 months with £/€ exchange rate impacting on price competitiveness
NI New Export BusinessMonthly
20
30
40
50
60
70
May-03 May-05 May-07 May-09 May-11 May-13 May-15
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
PMI signals fastest rate of jobs growth in 7yrs in Q2 but rate of jobs growth eases sharply in H2-14 but rebounds in H1-15
NI Employment: PMI v QES**
35
40
45
50
55
60
2005 Q2 2007 Q2 2009 Q2 2011 Q2 2013 Q2 2015 Q2*
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. * average of April & May for PMI only
RoI firms report a pick-up in employment growth in May with NI & UK maintaining their April rates of growth
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
May-03 May-05 May-07 May-09 May-11 May-13 May-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Job Gains
Job Losses
Inflationary pressures remain subdued but have been picking up whereas output prices continue to fall
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
May-03 May-05 May-07 May-09 May-11 May-13 May-15
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services rising
Regional Comparisons
All UK regions report output growth in May
Output / Business ActivityMay 2015
50 = No change
60.9
52.751.9
55.8
40
45
50
55
60
65
NE Wal East Lon UK NW SE SW WM EM Y&H NI Scot RoI
PMI Index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
Most of the UK regions posted strong rates of growth over the last 3 months but rates of growth weak for Scotland & NI
Output / Business Activity 3 months to May 2015
50 = No change
57.5
60.1
50.7
40
45
50
55
60
65
Lon NE Wal SE WM UK East Y&H NW SW EM Scot NI RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
The RoI reported the fastest rate of growth in business activity over the last 12 months & Scotland the slowest
Output / Business Activity12 months to May 2015
50 = No change
53.2
57.6
60.4
44
47
50
53
56
59
62
65
NE Wal Lon SE WM East UK Y&H NW EM SW NI Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
The RoI posts the fastest rate of employment growth while Scotland records the slowest pace of job creation
Employment LevelsMay 2015
50 = No change
51.6
53.0
59.8
52.7
55.7
46
48
50
52
54
56
58
60
62
East Wal SW NW WM UK Lon Y&H EM NI SE NE Scot RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
NI & Scotland post the weakest rates of job creation within the UK over the last 3 months
Employment Levels3 months to May 2015
50 = No change
52.5
55.9
51.6
58.8
46
48
50
52
54
56
58
60
East WM Y&H SW Lon UK Wal NW EM SE NE NI Scot RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Scotland, the North East & NI posted the weakest rates of jobs growth over the last year with the RoI the strongest
Employment Levels 12 months to May 2015
50 = No change
56.1
52.5
58.4
46
48
50
52
54
56
58
60
East WM Y&H UK Lon SW NW SE EM Wal Scot NI NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK manufacturing & services output growth eases in May with construction reporting a pick-up in its growth rate
UK Business Activity / Output - PMIs
20
30
40
50
60
70
May-05 May-07 May-09 May-11 May-13 May-15
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of growth between Q1-13 & Q3-14. Growth eased in Q1 contrary to what the PMI signalled
UK GDP versus UK Composite PMIUK Composite includes Construction
25
30
35
40
45
50
55
60
65
2007 Q4 2009 Q2 2010 Q4 2012 Q2 2013 Q4 2015 Q2*
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, * PMI refers to average of April & May
RoI output growth accelerates across all sectors in May
Rates Charged By Sub-Contractors Availability of Sub-Contractors
Source: Markit Economics & Ulster Bank
IncraesingD
ecreasing
RoI construction firms remain very optimistic about the year ahead
Future Business Activity Index - PMIs
20
30
40
50
60
70
80
90
100
May-00 May-03 May-06 May-09 May-12 May-15
RoI Future Activity RoI Long-Term Average
Source: Markit Economics
Optim
ismPessim
ism
In 12mths time do you expect overall activity to be higher than now, lower, or the ?
Slide 63
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