Ulster Bank Northern Ireland Purchasing Managers Index (PMI) Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector February 2015 Survey Update Issued 9 th March 2015 Richard Ramsey Chief Economist Northern Ireland www.ulstereconomix.com [email protected]Twitter @UB_Economics
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Slide pack, Ulster Bank Northern Ireland PMI, February 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 both sides of the 50 threshold in February
Australia - PMI
30
35
40
45
50
55
60
65
Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
NI records its 3rd consecutive month of contraction as it continues to diverge from the UK & RoI
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
NI UK RoI
Source: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction
ExpansionC
ontraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests growth in DFP’s private sector composite index (combines indices for construction, services, agriculture & industrial production) throughout 2014
NI Private Sector Output Index Versus NI PMI
-6-5-4
-3-2-1012
345
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1*
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,Q2 2014 is latest data for NICEI. *Q1 refers to average of January & February
50 mark is the threshold for expansion / contraction with PMI Expansion
ContractionE i
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’s recovery took hold in H2 of 2013 with all indicators improving in H1 2014 but easing in H2 2014
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
H2
PMI Index
Business Activity New Orders Employment Export Orders
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI has started 2015 on a negative note with output contracting and new orders broadly flat
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Incoming orders for NI firms slump in H2 with January & February 2015 broadly flat
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-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 a 5th month of contraction as activity slows
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
Export orders flat or falling in each of the last 4 months
NI New Export BusinessMonthly
20
30
40
50
60
70
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
PMI signals the fastest rate of jobs growth in 7 years in Q2 with the pace of job creation easing sharply since
NI Employment: PMI v QES**
35
40
45
50
55
60
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 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. *Q1 refers to average of January & February
Job creation accelerates in February for all 3 economies with NI rebounding after January’s contraction
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Inflationary pressures continue to ease with output prices falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services falling
Regional Comparisons
NI was the only UK region to see a contraction in output in February
Output / Business ActivityFebruary 201550 = No change
48.8
50.2
60.5
57.0
40
45
50
55
60
65
Lon WM Y&H SE UK Wal NW East SW EM NE Scot NI RoI
PMI Index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
Most of the UK regions & the RoI posted strong rates of growth but NI remains at the foot of regional league table
Output / Business Activity 3 months to February 2015
50 = No change
56.5
60.7
48.9
40
45
50
55
60
65
Lon WM Wal SE East UK SW Y&H NW NE 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 February 2015
50 = No change
55.5
57.9
60.3
44
47
50
53
56
59
62
65
Lon Wal NE SE East WM UK EM Y&H NW SW NI Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
Employment on the rise again in NI after January’s decline. RoI continues to report the strongest rates of growth
Employment LevelsFebruary 2015
50 = No change59.4
52.8
56.8
46
48
50
52
54
56
58
60
WM East SE Lon NW UK EM Y&H Wal SW NE NI 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 January 2015
50 = No change
56.2
50.8
59.2
46
48
50
52
54
56
58
60
East WM Lon UK NW SE Y&H Wal SW EM NE Scot NI 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 February 2015
50 = No change
56
57.9
53.4
46
48
50
52
54
56
58
60
East Y&H NW UK Lon WM SE EM SW Wal NI Scot NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK manufacturing & construction sectors report an acceleration in output growth in February
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth between Q1- 13 & Q3-14. Growth eased in Q4 but picks up in Q1-15
UK GDP versus UK Composite PMIUK Composite includes Construction
Input cost inflation remains at a 6-year low. Output prices have fallen in 8 of the last 10 months
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
PMI signals a moderation in manufacturing employment growth in H2-14 & Q1-15 following record high in Q2
NI Manufacturing Employment: PMI v QES**
30
35
40
45
50
55
60
65
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 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. *Q1 refers to average of January & February
Service sector experiences its first fall (monthly) in orders & output in Feb-15 but jobs growth at 7-mth high
NI Service Sector (excludes Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
RoI firms maintain strong rates of output growth but NI firms post their 1st monthly fall in 20 months in February
Services Output (excluding Retail)3 month moving average
30
40
50
60
70
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI firms reported their first decline (monthly) in 20 months in February
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
NI’s services firms still reporting input cost inflation but output prices have fallen in 9 of the last 13 months
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
UK, RoI and NI firms all reporting a pick-up in service sector employment growth over the 3 months to Feb-15
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Pace of job creation within the services sector eased in H2-14 but has picked up in Q1-15
NI Services Employment: PMI v QES**
40
45
50
55
60
65
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 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. *Q1 refers to average of January & February
NI retailers starting 2015 the way 2014 ended with output & orders contracting at a rapid rate
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
Local retailers report heavy discounting with output prices falling at rates seen in mid-2009
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13 Feb-15
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI Profits squeeze
Since Q2-14’s record rates of growth, NI’s construction firms report a significant easing in their rates of growth
NI Construction PMI3 month moving average
20
30
40
50
60
70
Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
Input cost inflation remains high but construction firms are at least still able to raise their prices
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Mar-09 May-10 Jul-11 Sep-12 Nov-13 Jan-15
PMI IndexInput Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
InflationD
eflation
NI’s construction PMI posts jobs growth since Q3 2013 but this is largely due to NI firms working outside of NI
NI Construction Employment: PMI v QES**
20
25
30
35
40
45
50
55
60
65
2005 Q1 2007 Q3 2010 Q1 2012 Q3 2015 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. *Q1 refers to average of January & February
Strong rates of output growth amongst UK & RoI firms with NI firms reporting growth albeit at a weaker rate
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
70
Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
NI orders growth continues to ease from recent record high with RoI growth slowing too. UK firms see growth stabilise
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
70
Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms. However, civil engineering activity has slowed in recent months
UK Construction Activity - PMIs3 month moving average
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