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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
March 2013 Survey Update
Issued 15th
April 2013
Richard Ramsey
Chief Economist Northern Ireland
[email protected]
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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.
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Global output growth picks up 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
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
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… but all sectors within the Eurozone are still contracting
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
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics Output Indices Expansion
Contraction
Page 5
Greece, Australia, France & Italy post steepest falls in manufacturing output. Israel* posts strongest gain (*Feb)
PMIs: Manufacturing Output March 2013
35 40 45 50 55 60 65
GreeceAustralia
FranceItaly
SpainEZEU
AustriaUK
S.AfricaIreland
CanadaPoland
NetherlandSwitzerland
CzechGermany
SingaporeIndonesia
JapanRussia
NIIndia
VietnamTurkeyGlobal
S.KoreaUS
BrazilMexico
DenmarkChina
N.ZealandTaiwanIsrael*
Source: Markit Economics Output Indices, *February
NI, RoI & UK
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Services output expanding for BRICs, US, Germany, Japan, UK & Ireland. France, Spain & Italy post the steepest declines
PMIs: Services Output March 2013
40 45 50 55 60
FranceSpain
ItalyEZEUNI
AustraliaBrazil
GermanyIndia
IrelandUK
Emerging MarketsGlobalJapanChina
RussiaUS*
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
Page 7
The 2nd, 3rd & 4th largest economies within the eurozone are contracting at a rapid rate
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
Source: Markit Economics PMIs
Contraction
Expansion
Page 8
US remains the best performer relative to China, UK & EZ
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
Eurozone US (ISM) China UK
Source: Markit Economics
ExpansionC
ontraction
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… and US and China are neck and neck in terms of their manufacturing PMIs
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
US (ISM) China Japan Eurozone
Source: Markit Economics
Contraction
Expansion
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UK posts modest growth in March with business activity flat for the RoI and the rate of contraction eases for NI
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
NI UK RoI
Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
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PMI suggests private sector composite index (combines DFP indices for construction, services & industrial production) in Q1 2013 to be flat
NI Private Sector Output Index Versus NI PMI
-5
-4
-3
-2
-1
0
1
2
3
4
5
2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1
PSO Q/Q%
30
35
40
45
50
55
60
65PMI
UB PSO Left Hand Scale UB PMI Right Hand Scale
Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
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NI output, new orders and employment all post modest contractions over the last 3 months
NI Private Sector Activity3 month moving average
30
35
40
45
50
55
60
65
70
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
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Pace of contraction in NI new orders eases
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Orders increasing
Orders C
ontracting
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NI’s levels of work outstanding sees its pace of decline ease markedly over the last 3 months
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
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The pace of decline in export orders accelerates in March
NI New Export BusinessMonthly
20
25
30
35
40
45
50
55
60
65
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI
Grow
th Accelerating
Contraction A
ccelerating
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PMI underestimated job gains in Q2 & Q3 (relative to official jobs survey) further job losses signalled in Q4 2012 but flat in Q1 2013
NI Employment: PMI v QES*
35
40
45
50
55
60
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
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
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes the public sector
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages
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The UK, RoI & NI all see a fall in their respective employment indices with NI posting a decline in staffing levels
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
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Input cost inflation eases in March (but up over last 3 months) with output prices and charges still falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Price of goods & services falling
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Regional Comparisons
Page 20
3 UK regions & the RoI post a contraction in business activity in March
Output / Business ActivityMarch 2013
50 = No change
50.9
48.949.9
40
45
50
55
Lon Wal Y&H SE EM Scot UK NW East WM SW NI NE RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
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The North East posts the sharpest rate of decline over the last 3 months followed by NI…
Output / Business Activity 3 months to March 2013
50 = No change
48.5
51.151.9
40
42
44
46
48
50
52
54
56
Wal Y&H Lon SE Scot EM East UK NW WM SW NI NE RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
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…but NI has posted the steepest decline over the last 12 months
Output / Business Activity 12 months to March 2013
50 = No change
51.551.1
44.7
40
45
50
55
Lon Y&H Wal WM EM Scot SE UK East NW SW NE NI RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
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Three English regions & NI report falling employment levels in March …
Employment LevelsMarch 2013
50 = No change
50.1
49.0
50.8
44
46
48
50
52
54
WM NE East Scot EM Wal UK SE Lon SW NW NI Y&H RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
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…and 4 UK regions (incl. NI) post job losses over last 3 months…
Employment LevelsLast 3 months to March 2013
50 = No change
49.5
50.6
52.1
44
46
48
50
52
54
SE East WM EM Lon Scot Wal UK NE NW Y&H NI SW RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
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NI posts the steepest decline in employment over the last 12 months
Employment Levels12 months to March 2013
50 = No change
50.451.2
47.8
42
44
46
48
50
52
54
EM WM SE East Scot Y&H UK Wal Lon SW NE NW NI RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
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Sectoral Comparisons
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UK service sector growth accelerates in March, but manufacturing & construction post contractions
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
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UK composite PMI suggests Q1 2013 GDP growth will be marginal at best
UK GDP versus UK Composite PMI
25
30
35
40
45
50
55
60
65
2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 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
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Manufacturing joins construction below 50 level in the RoI
RoI Business Activity - PMIs3 month moving average
20
25
30
35
40
45
50
55
60
65
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Manufacturing Services Construction No Change
Source: Markit Economics
ExpansionC
ontraction
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NI services & construction sectors contracting but manufacturing is growing
NI Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
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…with services and construction sectors still reporting falling employment levels
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
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Manufacturing posts output, employment and new orders growth over the last three months
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
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NI outperforming the UK and the RoI in terms of manufacturing output growth
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
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NI posts the strongest growth in new orders
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
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N.Ireland is outperforming 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
RoI Italy Spain Greece NI
Source: Markit Economics PMIs, NI is 3 month moving average
Contraction
Expansion
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Cost price inflation easing for local manufacturing firms and output prices are rising (return of pricing power)
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
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PMI signals job gains in Q1 but some redundancies announced have still to take effect
NI Manufacturing Employment: PMI v QES*
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Q/Q
PMI Employment Index No Change QES Q/Q
Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms
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RoI & UK growth continues while NI’s pace of decline eases
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
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New orders growth slowing in the RoI & picking up in the UK. Meanwhile NI still contracting
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
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…with employment levels still falling in NI over the last three months
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Page 41
The services PMI signalled modest employment declines in Q4 (& Q1). But QES posted job gains in Q4
NI Services Employment: PMI v QES*
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
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,PMI 3mth averages
Page 42
Local retailers still reporting falling orders & activity
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Page 43
Profits squeeze on local retailers appears to be easing
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Page 44
NI construction sector still in the midst of a severe downturn
NI Construction PMI3 month moving average
20
30
40
50
60
Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
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…with profits squeeze continuing
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
PMI IndexInput Prices Output Prices No Change
Source: Markit Economics & Ulster Bank PMI
InflationD
eflation
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NI PMI has been a reasonably good predictor of actual job losses in the official employment surveys (QES)
NI Construction Employment: PMI v QES
20
25
30
35
40
45
50
55
60
65
Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
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 PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages
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UK, RoI & NI all post contractions in construction output
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Page 48
… and with new orders falling in NI, UK & RoI
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Page 49
Growth opportunities for NI firms within GB will wane as activity eases
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
Page 50
Lack of opportunities in the RoI with all construction sub-sectors declining in March
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
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Page 51
Slide 51
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