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

1. Ulster Bank Northern Ireland Purchasing Managers Index (PMI) Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector September 2014 Survey Update Issued 13th October 2014
Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com Twitter @UB_Economics

2. 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.

3. Global manufacturing & services output growth eases in September
Global Output - PMI 253035404550556065Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Total ManufacturingServicesSource: Markit Economics ExpansionContraction

4. The EZ’s services sector loses momentum with retail & construction still contracting
Eurozone PMIs: Output253035404550556065Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Composite (M&S)ManufacturingServicesConstructionRetailNo ChangeSource: Markit Economics ExpansionContraction

5. The EZ’s composite PMI has suggested economic growth in Q2 & Q3 whereas GDP was flat in Q2
EZ GDP versus EZ Composite PMIComposite excludes construction 20253035404550556065702006 Q32008 Q32010 Q32012 Q32014 Q3PMI Index-3-2.5-2-1.5-1-0.500.511.52GDP % Q/QGDP Q/QPMI Source: Bloomberg & Markit EconomicsEZ Q2-14 GDP 0%

6. After New Zealand*, Northern Ireland firms posted the fastest rates of manufacturing output growth
PMIs: Manufacturing Output September 2014354045505560657075 AustraliaS.KoreaAustriaFrancePolandBrazilGreeceIndonesiaEZGermanySingaporeEUTurkeyVietnamChinaItalyUKRussiaIndiaNetherlandsS.AfricaGlobalJapanMexicoSpainCanadaDenmarkTaiwanSwitzerlandCzech RepublicIrelandUSNIN.Zealand* Source: Markit Economics Output Indices, *AugustUK, NI & RoI€

7. The Republic of Ireland, UK, US & NI posted the fastest rates of service sector output growth in September
PMIs: Services Output September 201435404550556065AustraliaFranceItalyRussiaBrazilIndiaEZJapanEmerging MarketsChinaEUGlobalGermanySpainDeveloped MarketsNIUKUS* IrelandSource: Markit Economics Output Indices€

8. Spain, Ireland & the UK post a slowdown in growth in September with Italy & France in contraction mode
Composite PMIs (Manufacturing & Services ** Excludes Construction**) 253035404550556065Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Source: Markit Economics PMIs ContractionExpansion

9. The US, UK, EZ & Chinese Composite PMIs all record an easing in their growth rates in September
Composite PMIs (Manufacturing & Services ** Excludes Construction**) 35404550556065Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14EurozoneUS (Markit)ChinaUKSource: Markit Economics PMIs, US begins Jul-11 ExpansionContraction

10. The US continues to enjoy a robust manufacturing recovery remains whilst the EZ approaches stagnation
Manufacturing PMIs 253035404550556065Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14US (ISM)ChinaJapanEurozoneNo ChangeSource: Markit Economics ContractionExpansion

11. Emerging markets post their strongest rate of growth in 18 months due primarily to a pick-up in India & Brazil
Composite PMIs (Manufacturing & Services ** Excludes Construction**) 3035404550556065Aug-07Aug-08Aug-09Aug-10Aug-11Aug-12Aug-13Aug-14BrazilRussiaIndiaEmerging MarketsSource: Markit Economics ContractionExpansion

12. Australia’s services & manufacturing sectors remain ‘Down Under’ the 50 threshold in August
Australia - PMI3035404550556065Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14ManufacturingServicesNo ChangeSource: Markit Economics PMIs ContractionExpansion

13. Firms in the UK & RoI signal an easing in their rates of growth in output but NI’s pace of growth picks up
Private Sector Business Activity - PMIs 3035404550556065Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14NIUKRoISource: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction ExpansionContraction **PMI Surveys Exclude Agriculture & Public Sector**

14. PMI suggests growth in DFP’s private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q1-Q3 2014
NI Private Sector Output Index Versus NI PMI-6-5-4-3-2-10123452004 Q12005 Q32007 Q12008 Q32010 Q12011 Q32013 Q12014 Q3NICEI Q/Q% 3035404550556065PMI NICEI Left Hand ScalePMI Right Hand ScaleSource: DFP NI Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI,Q1 2014 is latest data for NICEI50 mark is the threshold for expansion / contraction with PMI ExpansionContractionEi

15. NI’s recovery took hold in H2 of 2013 with all indicators improving in H1 2014 but easing in Q3 2014
NI Private Sector Performance (PMI) 3035404550556065 2006H22007H12007H22008H12008H22009H12009H22010H12010H22011H12011H22012H12012H22013H12013H22014H12014Q3 PMI Index Business ActivityNew OrdersEmploymentExport Orders ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI

16. The pace of growth in employment & output amongst NI firms picks up in September but new orders growth slips
NI Private Sector ActivityMonthly303540455055606570Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14Business ActivityNew BusinessEmploymentSource: Markit Economics & Ulster Bank NI PMI ExpansionContraction

17. RoI order books are growing at their fastest rate in >14 yrs but the pace of growth slips to an 11-mth low in NI
Private Sector New OrdersMonthly3035404550556065Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14NIUKRoISource: Markit Economics & Ulster Bank NI Orders increasingOrders Contracting

18. Following a surge in backlogs of work, notably within NI, outstanding work eases to a 12-mth low in September
Private Sector Backlogs3 month moving average30354045505560Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14NIUKRoISource: Markit Economics & Ulster Bank NI PMI Increasing Decreasing

19. NI firms post their 15th successive monthly rise in export orders in September but the pace of growth slows
NI New Export Business3 month moving average253035404550556065Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14Export OrdersNo ChangeSource: Markit Economics & Ulster Bank NI PMI Growth Accelerating Contraction Accelerating

20. PMI signals the fastest rate of jobs growth in 7 years in Q2 with the pace of job creation easing in Q3
NI Employment: PMI v QES* 3540455055602004 Q32006 Q32008 Q32010 Q32012 Q32014 Q3PMI Index-1.5% -1.3% -1.0% -0.8% -0.5% -0.3% 0.0% 0.3% 0.5% 0.8% 1.0% Q/QPMI Employment IndexNo ChangeQES Q/Q*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector Discontinuity in QES SeriesJob LossesJob gainsSource: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction

21. Job creation accelerates in the RoI, UK and NI in September with the RoI posting the fastest rate of growth
Private Sector Employment LevelsMonthly30354045505560Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14NIUKRoISource: Markit Economics & Ulster Bank NI PMI Job GainsJob Losses

22. Output cost inflation remains very subdued
NI Private Sector Profit Squeeze3 Month Moving Average304050607080Sep-04Sep-06Sep-08Sep-10Sep-12Sep-14Output PricesInput PricesNo Change InflationDeflation Source: Markit Economics & Ulster Bank NI PMIProfits squeezePrice of goods & services

23. Regional Comparisons

24. Strong growth across most UK regions & the RoI with Scotland posting the weakest growth rate in September
Output / Business ActivitySeptember 201450 = No change58.157.460.140455055606570EastY&HWMUKNWSENINELonEMWalSWScotRoIPMI Index ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI

25. …most of the UK regions & the RoI post strong rates of growth over the last 3 months…
Output / Business Activity Q3 201450 = No change58.060.758.940455055606570NEEastEMY&HNWSEUKLonWalNIWMSWScotRoIPMI Index Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction

26. …and over the last 12 months
Output / Business Activity12 months to September 201450 = No change59.258.958.74447505356596265LonSEEMSWNEEastUKWMNWWalNIY&HScotRoIPMI Index ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI

27. NI posts further job gains in September lags behind the UK & the RoI. The North East posts job losses
Employment LevelsSeptember 201450 = No change55.557.853.84648505254565860Y&HEastSWWMUKNWWalEMSEScotNILonNERoIPMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI

28. Most UK regions (including NI) and the RoI post strong rates of employment growth over the last 3 months
Employment LevelsQ3 201450 = No change55.757.453.94648505254565860WMEastY&HSWUKSENWEMLonScotNIWalNERoIPMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI

29. The RoI, London & the North West posted the sharpest rises in employment levels over the last year
Employment Levels12 Months to September 201450 = No change55.854.356.746485052545658LonNWEastSWUKSEY&HWMNIEMScotWalNERoIPMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI

30. Sectoral Comparisons

31. UK services & manufacturing disappointing expectations with only construction posting an acceleration in growth
UK Business Activity / Output - PMIs203040506070Sep-06Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14ServicesManufacturingConstructionSource: Markit Economics ExpansionContraction

32. UK posts strong rates of economic growth between Q1 2013 & Q2 2014 with further growth expected in Q3
UK GDP versus UK Composite PMIUK Composite includes Construction2530354045505560652007 Q32008 Q32009 Q32010 Q32011 Q32012 Q32013 Q32014 Q3PMI Index-2.5-2-1.5-1-0.500.511.5GDP Q/QGDP Q/QPMI PMI No ChangeSource: ONS & Markit Economics

33. RoI output growth accelerates within services & construction but eases within the manufacturing sector
RoI Business Activity - PMIsMonthly2025303540455055606570Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14ManufacturingServicesConstructionNo ChangeSource: Markit Economics ContractionExpansion

34. NI’s manufacturing & construction firms reported stronger rates of growth in output in Q3-14 than H1-14
NI Private Sector Business Activity (PMI) 3035404550556065 2006H22007H12007H22008H12008H22009H12009H22010H12010H22011H12011H22012H12012H22013H12013H22014H12014Q3 PMI Index ManufacturingServicesConstructionRetail ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI

35. NI’s services & construction sectors saw output growth ease in Q3 relative to Q2
Northern Ireland Private Sector Output 3 month moving average303540455055606570Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14ManufacturingServicesConstructionSource: Markit Economics & Ulster Bank NI PMI ExpansionContraction

36. …with construction & services reporting an easing in the rates of employment growth over the last 3 months
NI PMI - Employment Index 3 month moving average253035404550556065Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14ManufacturingServicesConstructionSource: Markit Economics & Ulster Bank NI PMI Job GainsJob Losses

37. NI’s manufacturing firms report an acceleration in output and new orders growth in Q3
NI Manufacturing Activity3 month moving average25303540455055606570Sep-03Jul-05May-07Mar-09Jan-11Nov-12Sep-14Business activityNew OrdersEmploymentSource: Markit Economics & Ulster Bank NI Growth acceleratingContraction accelerating

38. NI & RoI post a pick-up in their manufacturing output growth rates in Q3 while the growth rate eases markedly in the UK
Manufacturing Output3 month moving average3035404550556065Sep-04Sep-06Sep-08Sep-10Sep-12Sep-14UKNIRoINo ChangeSource: Markit Economics & Ulster Bank NI PMI ContractionExpansion

39. Manufacturing new orders growth rates accelerates in NI in Q3 but eases significantly in the UK
Manufacturing New Orders3 month moving average253035404550556065Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14UKNIRoINo ChangeSource: Markit Economics & Ulster Bank NI PMI ContractionExpansion

40. NI has been outperforming some of its European competitors for most of the last 12 months
Manufacturing Output - PMI203040506070Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14RoIItalySpainGreeceNIFranceSource: Markit Economics PMIs ContractionExpansion

41. Pricing power eases as NI manufacturing firms report the weakest output price inflation since 2012
NI Manufacturing Input & Output Inflation3 month moving average304050607080Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14No ChangeInput CostsOutput Prices InflationDeflation Source: Markit Economics & Ulster Bank NI PMIProfits squeeze

42. The PMI is signalling a moderation in manufacturing employment growth in Q3 following record high in Q2
NI Manufacturing Employment: PMI v QES* 30354045505560652004 Q32006 Q32008 Q32010 Q32012 Q32014 Q3PMI Index-5% -4% -3% -2% -1% 0% 1% 2% 3% 4% Q/QPMI Employment IndexNo ChangeQES Q/QDiscontinuity in QES SeriesJob lossesJob 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

43. Service sector experiences a slowdown in its rates of growth in output, employment & new orders in Q3
NI Service Sector (excludes Retail) 3 month moving average303540455055606570Sep-03Jul-05May-07Mar-09Jan-11Nov-12Sep-14Business activityNew OrdersEmploymentSource: Markit Economics & Ulster Bank NI Growth acceleratingContraction accelerating

44. UK & RoI firms report an acceleration in their rates of output growth whilst output growth for NI firms eases
Services Output (excluding Retail) 3 month moving average3040506070Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14UKNIRoINo ChangeSource: Markit Economics & Ulster Bank NI PMI ContractionExpansion

45. …but NI firms report a marked slowdown in the rate of new orders growth in Q3
Services New Orders (excluding Retail) 3 month moving average3040506070Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14UKNIRoINo ChangeSource: Markit Economics & Ulster Bank NI PMI ContractionExpansion

46. NI’s service sector posts a decline in output prices in September & input cost inflation eases to a 27-month low
NI Services Input & Output Inflation3 month moving average304050607080Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14No ChangeInput CostsOutput Prices InflationDeflation Source: Markit Economics & Ulster Bank NI Profits squeeze

47. Service sector employment growth eases in NI & UK in Q3 but remains strong in the RoI
Services Employment3 month moving average3035404550556065Sep-04Sep-06Sep-08Sep-10Sep-12Sep-14UKRoININo ChangeSource: Markit Economics & Ulster Bank NI PMI ContractionExpansion

48. In Q2 the services PMI showed its fastest rate of jobs growth since Q4 2007. Pace of job creation eases in Q3
NI Services Employment: PMI v QES* 4045505560652004 Q32006 Q32008 Q32010 Q32012 Q32014 Q3PMI Index-1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Q/QPMI Employment IndexNo ChangeQES Q/QDiscontinuity in QES SeriesJob lossesJob 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

49. NI retailers report a much, much weaker Q3 relative to a bumper Q2 (boosted by Giro D’Italia)
Northern Ireland Retail PMI3 monthly average253545556575Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14Business ActivityNew OrdersBacklogsNo ChangeSource: Markit Economics & Ulster Bank NI ExpansionContraction

50. Local retailers report their first fall in output prices in 5 years in September
NI Retail Input & Output Inflation3 month moving average30405060708090Sep-04May-06Jan-08Sep-09May-11Jan-13Sep-14Input CostsOutput PricesNo Change InflationDeflation Source: Markit Economics & Ulster Bank NI Profits squeeze

51. Following Q2’s record rates of growth, NI’s construction firms report a slight easing in their rates of growth in Q3
NI Construction PMI3 month moving average203040506070Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14OutputNew OrdersEmploymentSource: Markit Economics, Ulster Bank PMI ExpansionContraction 50 = No change

52. …and output price inflation has eased while input cost inflation has accelerated in Q3
NI Construction Sector Profits Squeeze3 month moving average203040506070Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14PMI IndexInput PricesOutput PricesNo ChangeSource: Markit Economics & Ulster Bank InflationDeflation

53. NI’s construction PMI posts its 5th successive quarterly rise in employment in Q3 but QES shows a fall in Q1
NI Construction Employment: PMI v QES* 202530354045505560652004 Q32007 Q12009 Q32012 Q12014 Q3PMI Index-10.0% -7.5% -5.0% -2.5% 0.0% 2.5% 5.0% Q/QPMI Employment IndexNo ChangeQES Q/QDiscontinuity in QES SeriesJob lossesJob 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

54. Construction output growth remains strong in all three economies in Q3
Construction Sector Output - PMI3 month moving average203040506070Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14PMI IndexNIUKRoISource: Markit Economics ExpansionContraction

55. NI new orders growth eases from record high & remains strong in Q3 suggesting significant work in the pipeline
Construction Sector New Orders - PMI3 month moving average203040506070Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14PMI IndexNIUKRoISource: Markit Economics ExpansionContraction

56. Opportunities for NI firms. Housing activity has recently increased at its fastest rate since June 1997
UK Construction Activity - PMIs3 month moving average203040506070Sep-05Mar-07Sep-08Mar-10Sep-11Mar-13Sep-14Housing ActivityCommercial ActivityCivil Engineering ActivitySource: Markit Economics ExpansionContraction

57. …with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI3 month moving average203040506070Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Housing ActivityCommercial ActivityEngineering ActivitySource: Markit Economics & Ulster Bank ExpansionContraction 50 = No change

58. Slide 58
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