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Slide pack Ulster Bank NI PMI February 2014
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Slide pack Ulster Bank NI PMI February 2014

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Slide pack for the Ulster Bank NI PMI February 2014, including analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

Slide pack for the Ulster Bank NI PMI February 2014, including analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

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    Slide pack Ulster Bank NI PMI February 2014 Slide pack Ulster Bank NI PMI February 2014 Presentation 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 February 2014 Survey Update  Issued 10th March 2014 Richard Ramsey Chief Economist Northern Ireland 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 begins 2014 on a firmer footing than it started 2013 but service sector growth eases in February Global Output - PMI 65 Source: Markit Economics Expansion 60 55 Contraction 50 45 40 35 30 Total 25 Feb-07 Feb-08 Feb-09 Manufacturing Feb-10 Feb-11 Services Feb-12 Feb-13 Feb-14
    • The Eurozone started 2013 will all sectors contracting now only construction is waiting for a return to growth Eurozone PMIs: Output 65 Source: Markit Economics Expansion 60 55 50 Contraction 45 40 35 30 Composite (M&S) Manufacturing Services Construction 25 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Most economies post manufacturing output growth in February with NI’s growth rate faster than most PMIs: Manufacturing Output February 2014 Denmark Switzerland Czech Republi c N.Zealand* Poland NI Japan UK Netherlands Germany Taiwan EU EZ Austria Italy Turkey Global Spain India Greece Canada Mexico Ireland Australia Vietnam Singapore France Brazil Indonesia S.Korea Russia China S.Africa US 35 UK, NI & RoI € Source: Markit Economics Output Indices, *January. For the US ISM is used. 40 45 50 55 60 65 70
    • The UK & Republic of Ireland posted the fastest rates of service sector output growth in February PMIs: Services Output February 2014 UK Ireland Germany NI Australia US* EU Spain Italy EZ Global Emerging Markets China Russia Brazil Japan India France € Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services 35 40 45 50 55 60 65
    • Germany & Italy improve in February while France sees its rate of contraction accelerate Composite PMIs 65 (Manufacturing & Services ** Excludes Construction**) Expansion 60 55 50 Contraction 45 40 35 30 Source: Markit Economics PMIs 25 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • The US, UK & China saw their composite PMIs slip in February with the EZ pushing higher Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 Eurozone US (ISM) China UK Expansion 60 55 50 Contraction 45 40 Source: Markit Economics PMIs, US includes construction 35 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Japan & the Eurozone saw their growth rates slip in February with Chinese manufacturing sub-50 Manufacturing PMIs 65 US (ISM) China Japan Eurozone No Change 60 Expansion 55 50 Contraction 45 40 35 30 Source: Markit Economics 25 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Emerging markets slowdown continues but Brazil, Russia & India post a small improvement in February… Composite PMIs (Manufacturing & Services Brazil Russia ** Excludes Construction**) India Emerging Markets 65 Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics 30 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Australia’s services sector posts its first reading above 50 since January 2012 Australia - PMI 65 Manufacturing Services No Change 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics PMIs 30 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • The UK, NI & RoI see growth rates ease in February but the rates of growth still remain very strong Private Sector Business Activity - PMIs **PMI Surveys Exclude Agriculture & Public Sector** 65 NI UK RoI Expansion 60 55 50 45 Contraction 40 35 Source: Markit & Ulster Bank NI PMI 50 = threshold between expansion / contraction 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • PMI suggests growth in DFP’s new private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q4 & Q1-14 NI Private Sector Output Index Versus NI PMI PSO Q/Q% 5 4 NICEI Left Hand Scale PMI Right Hand Scale 50 mark is the threshold for expansion / contraction with PMI Expansion 3 2 PMI 65 60 55 1 0 50 -1 45 -2 Contraction -3 -4 -5 -6 Source: New DFP Northern Ireland Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI, * refers to average of Jan-14 & Feb-14 for PMI 40 35 30 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3 2014 Q1*
    • NI’s recovery took hold in the second half (H2) of 2013 NI Private Sector Performance (PMI) PMI Index 60 New Orders Employment Export Orders 55 50 45 40 35 Source: Markit Economics & Ulster Bank NI 20 07 H 1 20 07 H 2 20 08 H 1 20 08 H 2 20 09 H 1 20 09 H 2 20 10 H 1 20 10 H 2 20 11 H 1 20 11 H 2 20 12 H 1 20 12 H 2 20 13 H 1 20 13 H 2 30 Expansion Contraction Business Activity
    • NI firms reporting an easing in rates of growth from multi-year / survey highs in employment, output & orders NI Private Sector Activity Monthly 70 Business Activity New Business Employment Expansion 65 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Buoyant order books suggest more growth in the months ahead. But pace of growth is slowing from a strong position Private Sector New Orders Monthly NI UK Orders increasing 65 RoI 60 55 50 40 35 Source: Markit Economics & Ulster Bank NI Orders Contracting 45 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Surge in demand has led to backlogs of work particularly within the UK & NI Private Sector Backlogs 3 month moving average 60 UK RoI Increasing NI 55 50 Decreasing 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • NI firms post their 8th successive rise in export orders NI New Export Business 70 Expansion New Export Orders No Change 60 50 Contraction 40 30 Source: Markit Economics & Ulster Bank NI PMI 20 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • PMI underestimated QES job gains in 2012. PMI for Q3 signals fastest rate of jobs growth since Q4 2007 with even stronger growth in Q4/Q1 PMI Index NI Employment: PMI v QES* Q/Q 60 1.0% *QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector Job gains 55 0.8% 0.5% 0.3% Discontinuity in QES Series 50 0.0% -0.3% 45 -0.5% Job losses 40 -1.0% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 & Feb-14 average for PMI -1.3% 35 2004 Q1 -0.8% -1.5% 2006 Q3 2009 Q1 PMI Employment Index No Change 2011 Q3 QES Q/Q 2014 Q1*
    • UK & RoI firms saw job creation accelerate in February while NI firms saw an easing in the pace of jobs growth Private Sector Employment Levels Monthly 60 UK RoI Job Gains NI 55 50 Job Losses 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Input & output cost inflation eases in February with output prices falling for the 1st time in 10 months NI Private Sector Profit Squeeze 3 Month Moving Average Output Prices Input Prices 80 No Change Profits squeeze 70 Inflation 60 50 Price of goods & services rising Source: Markit Economics & Ulster Bank NI PMI Deflation 40 30 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14
    • Regional Comparisons
    • Strong growth across all UK regions and the RoI in February with NI mid-table in February Output / Business Activity February 2014 PMI Index 70 50 = No change 65 58.6 58.1 55.1 55 Expansion 60 50 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 WM SE Lon Wal SW UK East Y&H NI NW NE EM Scot RoI
    • …all the UK regions & the RoI post strong rates of growth over the last 3 months… Output / Business Activity 3 months to February 2014 PMI Index 70 50 = No change 65 59.0 58.3 57.2 55 Contraction 50 45 Source: Markit Economics & Ulster Bank NI PMI 40 WM SW SE East UK Lon Wal NW Expansion 60 NI NE Y&H EM Scot RoI
    • … and over the last 12 months Output / Business Activity 12 months to February 2014 PMI Index 65 60 50 = No change 57.8 54.8 55 50 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 Lon SE NW SW UK Wal WM EM Y&H East Scot NI Expansion 55.3 NE RoI
    • All UK regions post jobs growth in February with the RoI posting its fastest rate of job creation since June 2006 Employment Levels February 2014 PMI Index 62 50 = No change 60 58 56 57.3 56.0 Increasing 54 53.4 52 Decreasing 50 48 Source: Markit Economics & Ulster Bank NI PMI 46 NW Lon East UK SW Y&H Scot SE NE NI WM EM Wal RoI
    • All UK regions and the RoI post jobs growth over the last 3 months Employment Levels 3 months to February 2014 PMI Index 60 50 = No change 58 56.1 56 55.6 54.3 Increasing 54 52 Decreasing 50 48 Source: Markit Economics & Ulster Bank NI PMI 46 SW Lon NW UK SE East NI Y&H WM NE Scot Wal EM RoI
    • In 2013 NI posted its 1st annual increase in private sector employment since 2007 with trend continuing in 2014 Employment Levels PMI Index 58 12 Months to February 2014 50 = No change 56 54.1 Increasing 54 53.3 52 51.1 Decreasing 50 48 Source: Markit Economics & Ulster Bank NI PMI 46 SW Lon WM NW East SE UK Scot Wal NE Y&H EM NI RoI
    • Sectoral Comparisons
    • All sectors post strong growth with construction recently expanding at its fastest rate in six-and-a-half years UK Business Activity / Output - PMIs 70 Services Manufacturing Construction Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • UK posts strong rates of economic growth in Q2-Q4 with further growth expected in Q1 2014 UK GDP versus UK Composite PMI PMI Index 65 UK Composite includes Construction GDP Q/Q 1.5 60 1 55 0.5 50 0 45 -0.5 40 -1 35 -1.5 30 Source: ONS & Markit Economics, * for PMI average of January & February 25 -2 -2.5 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1* GDP Q/Q PMI PMI No Change
    • RoI output growth eases across all sectors in February, but services and construction remain at healthy levels RoI Business Activity - PMIs Monthly 70 Services Construction No Change 65 60 Expansion Manufacturing 55 Contraction 50 45 40 35 30 25 Source: Markit Economics 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • All 3 broad sectors within NI saw a marked turnaround in business activity in H2 2013 PMI Index NI Private Sector Business Activity (PMI) 65 Manufacturing Services Construction Retail Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI 20 07 H 20 1 07 H 20 2 08 H 20 1 08 H 20 2 09 H 20 1 09 H 20 2 10 H 20 1 10 H 20 2 11 H 20 1 11 H 20 2 12 H1 20 12 H 20 2 13 H 20 1 13 H2 30
    • All 3 broad sectors within NI continue to report robust rates of output growth in early-2014 Northern Ireland Private Sector Output 3 month moving average 65 Manufacturing Services Construction Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • …with all sectors also reporting employment growth over the last 3 months with manufacturing at a record rate NI PMI - Employment Index 3 month moving average 65 Manufacturing Services Construction Job Gains 60 55 50 Job Losses 45 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • NI manufacturers continue to report strong rates of growth in orders, employment & output over the last 3 months NI Manufacturing Activity - PMI 65 3 month moving average Business activity New Orders Employment Growth 60 55 Contraction 50 45 40 35 30 Source: Markit Economics & Ulster Bank NI 25 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • UK & NI manufacturing firms continue to post strong rates of growth in output during the last 3 months Manufacturing Output 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14
    • The UK posts the strongest rate of growth in new orders Manufacturing New Orders 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 Contraction 45 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • NI has been outperforming its European competitors Manufacturing Output - PMI 70 RoI Italy Spain Greece NI Expansion 60 50 Contraction 40 30 Source: Markit Economics PMIs 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • NI manufacturers post the slowest rate of input cost inflation in February in 20 months NI Manufacturing Input & Output Inflation 3 month moving average No Change Input Costs Output Prices 80 Profits squeeze 70 Inflation 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • PMI underestimated jobs surge in Q2. Following further job creation in Q3, PMI suggests more of the same in Q4/Q1 PMI Index 65 NI Manufacturing Employment: PMI v QES* Q/Q 4% *QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms 60 Job gains Discontinuity in QES Series 3% 2% 55 1% 50 0% 45 -1% Job losses 40 35 -3% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 & Feb-14 average for PMI -4% -5% 30 2004 Q1 -2% 2006 Q3 2009 Q1 PMI Employment Index 2011 Q3 No Change QES Q/Q 2014 Q1*
    • Service sector recovery well underway with new orders growth easing from its recent record high in January NI Service Sector (excludes Retail) 3 month moving average Business activity New Orders Growth accelerating 70 Employment 65 60 55 Contraction accelerating 50 45 40 35 Source: Markit Economics & Ulster Bank NI 30 Feb-03 Dec-04 Oct-06 Aug-08 Jun-10 Apr-12 Feb-14
    • All 3 economies post strong rates of growth in services output in February with RoI leading the way … Services Output (excluding Retail) 3 month moving average 70 UK NI RoI No Change 65 Expansion 60 55 50 Contraction 45 40 35 30 Source: Markit Economics & Ulster Bank NI PMI Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • … and new orders growth easing from recent highs Services New Orders (excluding Retail ) 3 month moving average 70 UK NI RoI No Change Expansion 60 Contraction 50 40 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Both input cost and output price inflation ease within service sector firms in February NI Services Input & Output Inflation 3 month moving average No Change Input Costs Output Prices 80 Profits squeeze 70 Inflation 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Service sector employment growth accelerates within in the UK, RoI & NI over the last 3 months to February Services Employment 3 month moving average 65 UK RoI NI No Change Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14
    • In Q4 the services PMI showed its fastest rate of jobs growth since Q4 2007 but growth has eased in Q1 2014 PMI Index 65 NI Services Employment: PMI v QES* Q/Q 1.5% *QES is DFP's official Quarterly Employment Survey of the number of jobs in NI and includes the public sector 1.0% 60 Job gains Discontinuity in QES Series 55 0.5% 50 0.0% 45 -0.5% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 & Feb-14 average for PMI Job losses -1.0% 40 2004 Q1 2006 Q3 2009 Q1 PMI Employment Index 2011 Q3 No Change QES Q/Q 2014 Q1*
    • NI retailers report an acceleration in sales and new orders in February Northern Ireland Retail PMI 3 monthly average 75 Business Activity New Orders Backlogs No Change Expansion 65 55 Contraction 45 35 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • Local retailers maintain pricing power in February NI Retail Input & Output Inflation 3 month moving average 90 Input Costs Output Prices No Change 80 Profits squeeze 70 Inflation 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI 30 Feb-04 Oct-05 Jun-07 Feb-09 Oct-10 Jun-12 Feb-14
    • NI construction sector continues to report growth in output, new orders & employment over the last 3 months NI Construction PMI 3 month moving average Output New Orders Employment Expansion 60 50 = No change 50 Contraction 40 30 Source: Markit Economics, Ulster Bank PMI 20 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • …and output prices have been rising at a record rate NI Construction Sector Profits Squeeze 3 month moving average PMI Index Input Prices Output Prices No Change 70 Inflation 60 50 Deflation 40 30 Source: Markit Economics & Ulster Bank 20 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • NI’s construction PMI posted its 1st quarter of jobs growth in Q3 2013 since Q4 2007 with further growth in Q4/Q1 PMI Index NI Construction Employment: PMI v QES* Q/Q 5.0% 65 **QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms 60 55 Discontinuity in QES Series Job gains 2.5% 0.0% 50 45 -2.5% 40 -5.0% 35 30 25 Job losses Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 & Feb-14 average for PMI -7.5% -10.0% 20 2004 Q1 2006 Q3 PMI Employment Index 2009 Q1 2011 Q3 No Change 2014 Q1* QES Q/Q
    • Construction output growth remains strong particularly within the UK Construction Sector Output - PMI 3 month moving average PMI Index 70 UK RoI Expansion NI 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • New orders growth suggests significant work remains in the pipeline Construction Sector New Orders - PMI 3 month moving average PMI Index 70 NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Opportunities for NI firms within GB market. House building is expanding at its fastest rate in over 11 years UK Construction Activity - PMIs 3 month moving average 70 Housing Activity Commercial Activity Civil Engineering Activity Expansion 60 Contraction 50 40 30 Source: Markit Economics 20 Feb-05 Aug-06 Feb-08 Aug-09 Feb-11 Aug-12 Feb-14
    • …with opportunities returning within the RoI too Republic of Ireland Construction Activity - PMI 3 month moving average 70 Housing Activity Commercial Activity Engineering Activity Expansion 60 50 = No change 50 Contraction 40 30 Source: Markit Economics & Ulster Bank 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14
    • Disclaimer This document is intended for clients of Ulster Bank Limited and Ulster Bank Ireland Limited (together and separately, "Ulster Bank") and is not intended for any other person. It does not constitute an offer or invitation to purchase or sell any instrument or to provide any service in any jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or engage in transactions in any of the instruments mentioned. The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication and are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be construed as such. This publication provides only a brief review of the complex issues discussed and recipients should not rely on information contained here without seeking specific advice on matters that concern them. Ulster Bank make no representations or warranties with respect to the information and disclaim all liability for use the recipient or their advisors make of the information. Over-the-counter (OTC) derivatives can involve a number of significant and complex risks which are dependent on the terms of the particular transaction and your circumstances. In the event the market has moved against the transaction you have undertaken, you may incur substantial costs if you wish to close out your position. Calls may be recorded. Slide 57