Ulster Bank PMI slide pack, March 2013
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Ulster Bank PMI slide pack, March 2013

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Slide pack comparing the latest PMIs from around the world, including comparisons between the UK, Eurozone and globally, and comparisons between Northern Ireland and elsewhere.

Slide pack comparing the latest PMIs from around the world, including comparisons between the UK, Eurozone and globally, and comparisons between Northern Ireland and elsewhere.

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Ulster Bank PMI slide pack, March 2013 Ulster Bank PMI slide pack, March 2013 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 March 2013 Survey Update  Issued 15th April 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
  • 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 = ExpansionData 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 picks up in March… Global Output - PMI 65 Source: Markit Economics 60 Expansion 55 50 45 Contraction 40 35 30 Total Manufacturing Services 25 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • … but all sectors within the Eurozone are still contracting Eurozone PMIs: Output 65 Source: Markit Economics Output Indices Expansion 60 55 50 Contraction 45 40 35 30 Composite (M&S) Manufacturing Services Construction 25 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • Greece, Australia, France & Italy post steepest falls inmanufacturing output. Israel* posts strongest gain (*Feb) PMIs: Manufacturing Output March 2013 Israel* Taiwan N.Zealand China Denmark Mexico Brazil US S.Korea Global Turkey Vietnam India NI NI, RoI & UK Russia Japan Indonesia Singapore Germany Czech Switzerland Netherland Poland Canada Ireland S.Africa UK Austria EU EZ Spain Italy France Source: Markit Economics Output Indices, Australia *February Greece 35 40 45 50 55 60 65
  • Services output expanding for BRICs, US, Germany, Japan,UK & Ireland. France, Spain & Italy post the steepest declines PMIs: Services Output March 2013 US* Russia China Japan Global Emerging Markets UK Ireland India Germany Brazil Australia NI EU EZ € Italy Source: Markit Economics Output Indices, * Spain US Non-manufacturing which is wider than France services 40 45 50 55 60
  • The 2nd, 3rd & 4th largest economies within the eurozoneare contracting at a rapid rate Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics PMIs 30 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • US remains the best performer relative to China, UK & EZ Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 Eurozone US (ISM) China UK 60 Expansion 55 50 Contraction 45 40 Source: Markit Economics 35 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • … and US and China are neck and neck in terms of theirmanufacturing PMIs Manufacturing PMIs 65 US (ISM) China Japan Eurozone 60 Expansion 55 50 45 Contraction 40 35 30 Source: Markit Economics 25 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • UK posts modest growth in March with business activityflat for the RoI and the rate of contraction eases for NI Private Sector Business Activity - PMIs **PMI Surveys Exclude Agriculture & Public Sector** 65 NI UK RoI 60 Expansion 55 50 45 Contraction 40 35 Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction 30 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • PMI suggests private sector composite index (combines DFP indices forconstruction, services & industrial production) in Q1 2013 to be flat NI Private Sector Output Index Versus NI PMI PSO Q/Q% PMI UB PSO Left Hand Scale UB PMI Right Hand Scale 5 65 50 mark is the threshold for expansion / contraction with PMI 4 60 3 Expansion 2 55 1 50 0 45 -1 -2 40 -3 Contraction 35 -4 Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics -5 30 2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1
  • NI output, new orders and employment all postmodest contractions over the last 3 months NI Private Sector Activity 3 month moving average70 Business Activity New Business Employment65 Expansion60555045 Contraction4035 Source: Markit Economics & Ulster Bank NI PMI30 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • Pace of contraction in NI new orders eases Private Sector New Orders 3 month moving average 65 Orders increasing NI UK RoI 60 55 50 45 Orders Contracting 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13
  • NI’s levels of work outstanding sees its pace of declineease markedly over the last 3 months Private Sector Backlogs 3 month moving average 60 NI UK RoI Increasing 55 50 45 Decreasing 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13
  • The pace of decline in export orders accelerates in March NI New Export Business Monthly Growth Accelerating 65 New Export Orders No Change 60 55 50 Contraction Accelerating 45 40 35 30 25 Source: Markit Economics & Ulster Bank NI 20 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13
  • PMI underestimated job gains in Q2 & Q3 (relative to official jobssurvey) further job losses signalled in Q4 2012 but flat in Q1 2013 PMI Index NI Employment: PMI v QES* Q/Q 60 1.0% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI & includes the public sector 0.8% 55 Job 0.5% gains 0.3% Discontinuity in QES Series 50 0.0% -0.3% 45 -0.5% Job -0.8% losses 40 -1.0% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / -1.3% contraction,PMI 3mth averages 35 -1.5% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 PMI Employment Index No Change QES Q/Q
  • The UK, RoI & NI all see a fall in their respective employmentindices with NI posting a decline in staffing levels Private Sector Employment Levels Monthly 60 NI UK RoI Job Gains 55 50 Job Losses 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • Input cost inflation eases in March (but up over last 3months) with output prices and charges still falling NI Private Sector Profit Squeeze 3 Month Moving Average Output Prices Input Prices No Change 80 Profits squeeze 70 Inflation 60 50 Deflation 40 Price of goods & Source: Markit Economics & Ulster Bank NI services falling 30 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • RegionalComparisons
  • 3 UK regions & the RoI post a contraction in businessactivity in March Output / Business Activity March 2013 PMI index 55 50 = No change Expansion 50.9 50 49.9 48.9 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 Lon Wal Y&H SE EM Scot UK NW East WM SW NI NE RoI
  • The North East posts the sharpest rate of decline over thelast 3 months followed by NI… Output / Business Activity 3 months to March 2013 PMI Index 50 = No change 56 Expansion 54 51.9 52 51.1 50 Contraction 48 48.5 46 44 42 Source: Markit Economics & Ulster Bank NI PMI 40 Wal Y&H Lon SE Scot EM East UK NW WM SW NI NE RoI
  • …but NI has posted the steepest decline over thelast 12 months Output / Business Activity PMI index 12 months to March 2013 50 = No change 55 Expansion 51.5 51.1 50 Contraction 45 44.7 Source: Markit Economics & Ulster Bank NI PMI 40 Lon Y&H Wal WM EM Scot SE UK East NW SW NE NI RoI
  • Three English regions & NI report falling employmentlevels in March … Employment Levels March 2013 PMI Index 54 50 = No change Increasing 52 50.8 50.1 50 Decreasing 49.0 48 46 Source: Markit Economics & Ulster Bank NI PMI 44 WM NE East Scot EM Wal UK SE Lon SW NW NI Y&H RoI
  • …and 4 UK regions (incl. NI) post job losses over last 3months… Employment Levels PMI Index Last 3 months to March 2013 54 50 = No change Increasing 52.1 52 50.6 50 49.5 Decreasing 48 46 Source: Markit Economics & Ulster Bank NI PMI 44 SE East WM EM Lon Scot Wal UK NE NW Y&H NI SW RoI
  • NI posts the steepest decline in employment over thelast 12 months Employment Levels 12 months to March 2013 PMI Index 50 = No change 54 Increasing 52 51.2 50.4 50 Decreasing 48 47.8 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 EM WM SE East Scot Y&H UK Wal Lon SW NE NW NI RoI
  • SectoralComparisons
  • UK service sector growth accelerates in March, butmanufacturing & construction post contractions UK Business Activity / Output - PMIs 70 Services Manufacturing Construction Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • UK composite PMI suggests Q1 2013 GDP growth willbe marginal at best UK GDP versus UK Composite PMI PMI Index GDP Q/Q 65 1.5 60 1 55 0.5 50 0 45 -0.5 40 -1 35 -1.5 30 -2 Source: ONS & Markit Economics 25 -2.5 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 GDP Q/Q PMI PMI No Change
  • Manufacturing joins construction below 50 level in the RoI RoI Business Activity - PMIs 3 month moving average 65 Manufacturing Services Construction No Change Expansion 60 55 50 Contraction 45 40 35 30 25 Source: Markit Economics 20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • NI services & construction sectors contracting butmanufacturing is growing NI Private Sector Output 3 month moving average 65 Manufacturing Services Construction 60 Expansion 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI 30 PMI Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • …with services and construction sectors still reportingfalling employment levels NI PMI - Employment Index 3 month moving average 65 Manufacturing Services Construction Job Gains 60 55 50 45 Job Losses 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • Manufacturing posts output, employment and neworders growth over the last three months NI Manufacturing Activity 3 month moving average 65 Growth accelerating Business activity New Orders Employment 60 55 50 45 Contraction accelerating 40 35 30 Source: Markit Economics & Ulster Bank NI 25 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • NI outperforming the UK and the RoI in terms ofmanufacturing output growth Manufacturing Output 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • NI posts the strongest growth in new orders Manufacturing New Orders 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 45 Contraction 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • N.Ireland is outperforming its European competitors Manufacturing Output - PMI 70 RoI Italy Spain Greece NI Expansion 60 50 40 Contraction 30 Source: Markit Economics PMIs, NI is 3 month moving average 20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • Cost price inflation easing for local manufacturing firmsand output prices are rising (return of pricing power) 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 30 PMI Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • PMI signals job gains in Q1 but some redundanciesannounced have still to take effect PMI Index NI Manufacturing Employment: PMI v QES* Q/Q 65 4% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI firms 3% 60 Discontinuity in QES Series Job gains 2% 55 1% 50 0% 45 -1% Job losses -2% 40 Source: DFP, Ulster Bank & Markit PMI Index 50 -3% denotes threshold between expansion / 35 contraction,PMI 3mth averages -4% 30 -5% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 PMI Employment Index No Change QES Q/Q
  • RoI & UK growth continues while NI’s pace of declineeases Services Output (excluding Retail) 3 month moving average 70 UK NI RoI No Change 65 Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • New orders growth slowing in the RoI & picking upin the UK. Meanwhile NI still contracting Services New Orders (excluding Retail ) 3 month moving average 70 UK NI RoI No Change Expansion 60 50 Contraction 40 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • …with employment levels still falling in NI over thelast three months Services Employment 3 month moving average 65 UK RoI NI No Change Expansion 60 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • The services PMI signalled modest employment declinesin Q4 (& Q1). But QES posted job gains in Q4 PMI Index NI Services Employment: PMI v QES* Q/Q 65 1.5% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI and includes the public sector 60 1.0% Discontinuity in QES Series 55 Job 0.5% gains 50 0.0% 45 -0.5% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages Job losses 40 -1.0% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 PMI Employment Index No Change QES Q/Q
  • Local retailers still reporting falling orders & activity 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 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • Profits squeeze on local retailers appears to be easing NI Retail Input & Output Inflation 3 month moving average 90 Input Costs Output Prices No Change Profits 80 squeeze Inflation 70 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI 30 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13
  • NI construction sector still in the midst of a severe downturn 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 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
  • …with profits squeeze continuing NI Construction Sector Profits Squeeze 3 month moving averagePMI Index Input Prices Output Prices No Change 70 Inflation 60 50 Deflation 40 30 Source: Markit Economics & Ulster Bank PMI 20 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
  • NI PMI has been a reasonably good predictor of actualjob losses in the official employment surveys (QES) PMI Index NI Construction Employment: PMI v QES Q/Q 65 5.0% *QES is NIs official Quarterly Employment Survey of the no. of jobs in NI firms 60 Job 2.5% 55 gains Discontinuity in QES Series 50 0.0% 45 -2.5% 40 35 -5.0% 30 Source: DFP, Ulster Bank & Markit PMI Index 50 -7.5% Job losses denotes threshold between expansion / contraction,PMI 25 3mth averages 20 -10.0% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 PMI Employment Index No Change QES Q/Q
  • UK, RoI & NI all post contractions in construction output Construction Sector Output - PMI 3 month moving average PMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
  • … and with new orders falling in NI, UK & RoI Construction Sector New Orders - PMI 3 month moving average PMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13
  • Growth opportunities for NI firms within GB will waneas activity eases UK Construction Activity - PMIs 3 month moving average 70 Housing Activity Commercial Activity Civil Engineering Activity Expansion 60 50 40 Contraction 30 Source: Markit Economics 20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • Lack of opportunities in the RoI with all constructionsub-sectors declining in March Republic of Ireland Construction Activity - PMI 3 month moving average 70 Housing Activity Commercial Activity Engineering Activity Expansion 60 50 = No change 50 40 Contraction 30 Source: Markit Economics & Ulster Bank 20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
  • DisclaimerThis document is intended for clients of Ulster Bank Limited and Ulster Bank Ireland Limited (together and separately, "Ulster Bank") and isnot intended for any other person. It does not constitute an offer or invitation to purchase or sell any instrument or to provide any service inany jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position orengage 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 andare subject to change without notice. The information contained herein should not be construed as advice, and is not intended to beconstrued as such.This publication provides only a brief review of the complex issues discussed and recipients should not rely on information contained herewithout seeking specific advice on matters that concern them. Ulster Bank make no representations or warranties with respect to theinformation and disclaim all liability for use the recipient or their advisors make of the information.Over-the-counter (OTC) derivates can involve a number of significant and complex risks which are dependent on the terms of the particulartransaction and your circumstances. In the event the market has moved against the transaction you have undertaken, you may incursubstantial costs if you wish to close out your position.Calls may be recorded. Slide 51