Slidepack for the Ulster Bank NI PMI, January 2014
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Slidepack for the Ulster Bank NI PMI, January 2014

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Ulster Bank Northern Ireland Purchasing Managers Index (PMI) slidepack, January 2014. Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

Ulster Bank Northern Ireland Purchasing Managers Index (PMI) slidepack, January 2014. Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

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Slidepack for the Ulster Bank NI PMI, January 2014 Slidepack for the Ulster Bank NI PMI, January 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 January 2014 Survey Update  Issued 10th February 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 growth begins 2014 on a firmer footing than it started 2013 Global Output - PMI 65 Source: Markit Economics Expansion 60 55 50 Contraction 45 40 35 30 Total 25 Jan-07 Jan-08 Jan-09 Manufacturing Jan-10 Jan-11 Services Jan-12 Jan-13 Jan-14
  • The Eurozone started 2013 will all sectors contracting now only construction is waiting for a return to growth Eurozone PMIs: Output 65 Expansion Source: Markit Economics Output Indices 60 55 50 Contraction 45 40 35 30 Composite (M&S) Manufacturing Services Construction 25 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • Northern Ireland manufacturing firms posted the fastest rate of output growth in January 2014! PMIs: Manufacturing Output January 2014 NI Japan Germany Czech Republic UK Denmark Taiwan Netherlands Poland N.Zealand* EU EZ Austria Italy Switzerland Mexico US Global Spain Turkey Vietnam Greece Ireland Canada India Israel** Singapore S.Korea China Brazil Indonesia France Russia S.Africa Australia 35 UK, NI & RoI € Source: Markit Economics Output Indices, *December ** October. For the US ISM is used. 40 45 50 55 60 65 70
  • The Republic of Ireland, N.Ireland and the UK posted the fastest rates of service sector output growth in January PMIs: Services Output January 2014 Ireland NI UK US* Spain Global EU Germany EZ Japan Emergin China Russia Brazil Italy Australia France India € Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services 35 40 45 50 55 60 65
  • Germany, Spain & Italy all improve in January 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 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • The UK & China saw their composite PMIs slip in January, the US stayed broadly the same & EZ moved 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 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • Japan & the Eurozone on the rise in January whilst the US & China move in the opposite direction Manufacturing PMIs 65 US (ISM) China Japan Eurozone No Change 60 Expansion 55 50 Contraction 45 40 35 30 Source: Markit Economics 25 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • Emerging markets slowdown continues… Composite PMIs (Manufacturing & Services Brazil Russia India ** Excludes Construction**) Emerging Markets No Change 65 Expansion 60 55 50 Contraction 45 40 35 Source: Markit Economics 30 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • Australia’s manufacturing and services sectors remain in contraction territory in January Australia - PMI 65 Manufacturing Services No Change 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics PMIs 30 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • The UK & RoI see growth rates ease in January while NI posts its fastest rate of growth in almost 10 years 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • PMI suggests growth in DFP’s new private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q3 & Q4 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 Jan-14 only 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
  • 2014 has started well with NI firms reporting an acceleration in job creation, output & new 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • Buoyant order books suggest more growth in the months ahead. NI’s new orders index hits a record high Private Sector New Orders Monthly NI UK Orders increasing 65 RoI 60 55 50 40 35 Source: Markit Economics & Ulster Bank NI 30 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Orders Contracting 45 Jan-14
  • Surge in demand is leading to backlogs of work with NI index accelerating rapidly in recent months 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • NI firms post their 7th 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 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-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 only 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 & NI firms all saw job creation accelerate in January 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • Private sector’s profitability squeeze remains but pricing power has been on the rise for 9 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 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
  • Regional Comparisons
  • Strong growth across all UK regions and the RoI in January with NI posting the 4th fastest rate of growth in UK Output / Business Activity January 2014 PMI Index 70 50 = No change 65 60.4 59.1 54.8 55 Expansion 60 50 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 SW SE WM NI East UK NW Wal Y&H Scot Lon NE EM RoI
  • …all the UK regions & the RoI post growth over the last 3 months Output / Business Activity PMI Index 70 3 months to January 2014 50 = No change 65 59.6 59.0 56.3 55 Contraction 50 45 Source: Markit Economics & Ulster Bank NI PMI 40 SW SE WM Lon East UK EM NW Expansion 60 NI NE Wal Y&H Scot RoI
  • … and over the last 12 months Output / Business Activity 12 months to January 2014 PMI Index 65 50 = No change 60 57.1 54.3 50 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 Lon SE NW SW UK EM Wal Y&H East WM Scot Expansion 54.5 55 NI NE RoI
  • All the UK regions and the Republic of Ireland post employment growth in January … Employment Levels January 2014 PMI Index 60 50 = No change 58 56 55.6 55.0 52.9 52 Decreasing 50 48 Source: Markit Economics & Ulster Bank NI PMI 46 SW Lon NW UK East Y&H NI Increasing 54 SE WM NE Scot Wal EM RoI
  • … and over the last 3 months Output / Business Activity 3 months to January 2014 PMI Index 70 50 = No change 65 59.6 59.0 56.3 55 Contraction 50 45 Source: Markit Economics & Ulster Bank NI PMI 40 SW SE WM Lon East UK EM NW Expansion 60 NI NE Wal Y&H Scot RoI
  • In 2013 NI posts its 1st annual increase in private sector employment since 2007 with trend continuing in January Output / Business Activity 12 months to January 2014 PMI Index 65 50 = No change 60 57.1 54.3 50 Contraction 45 Source: Markit Economics & Ulster Bank NI PMI 40 Lon SE NW SW UK EM Wal Y&H East WM Scot Expansion 54.5 55 NI NE RoI
  • Sectoral Comparisons
  • All sectors post strong growth with construction 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 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • UK posts strong rates of economic growth in Q2-Q4 PMI Index UK GDP versus UK Composite PMI UK Composite includes Construction GDP Q/Q 65 1.5 60 1 55 0.5 50 0 45 -0.5 40 -1 35 -1.5 30 Source: ONS & Markit Economics, * for PMI January only 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 January but remains 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 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-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 at the start of 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • NI manufacturers continue to report strong rates of growth in orders, employment & output over the last 3 months NI Manufacturing Activity 3 month moving average Business activity New Orders Employment 60 55 50 40 35 30 25 Jan-04 Source: Markit Economics & Ulster Bank NI Sep-05 May-07 Jan-09 Sep-10 May-12 Contraction accelerating 45 Growth accelerating 65 Jan-14
  • UK, RoI & 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 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-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 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • Cost price inflation remains for local manufacturing firms but pricing power is improving due to increased demand 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-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 -2% -3% 35 Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 only for PMI -4% 30 2004 Q1 -5% 2006 Q3 2009 Q1 PMI Employment Index 2011 Q3 No Change QES Q/Q 2014 Q1*
  • Service sector recovery well underway with new orders rising at their fastest rate since the survey began NI Service Sector (excludes Retail) 3 month moving average Business activity New Orders Employment 65 60 55 Contraction accelerating 50 45 40 35 Source: Markit Economics & Ulster Bank NI 30 Jan-03 Nov-04 Sep-06 Growth accelerating 70 Jul-08 May-10 Mar-12 Jan-14
  • All 3 economies post strong growth in services output in January with NI & RoI activity accelerating … 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • … and an acceleration in new orders growth for the RoI and NI too 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • Output price inflation within service sector firms eases in January from recent 5-year high 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • Service sector employment growth accelerates within in the RoI but eases for the UK & NI 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 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
  • In Q4 the services PMI shows the fastest rate of quarterly jobs growth since Q4 2007 but eased in Jan-14 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 -2% -3% 35 Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * Jan-14 only for PMI -4% 30 2004 Q1 -5% 2006 Q3 2009 Q1 PMI Employment Index 2011 Q3 No Change QES Q/Q 2014 Q1*
  • NI retailers continue to report strong rates of growth in business activity and new orders in January 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 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-14
  • Local retailers maintain pricing power in January NI Retail Input & Output Inflation 3 month moving average 90 Input Costs Output Prices No Change 80 Profits squeeze Inflation 70 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI 30 Jan-04 Sep-05 May-07 Jan-09 Sep-10 May-12 Jan-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 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-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 PMI 20 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-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 65 5.0% **QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms 60 55 Discontinuity in QES Series Job gains 50 2.5% 0.0% 45 -2.5% 40 35 -5.0% Job losses 30 25 -7.5% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction 20 2004 Q1 -10.0% 2006 Q3 PMI Employment Index 2009 Q1 2011 Q3 No Change 2014 Q1* QES Q/Q
  • Construction output growth accelerates in the UK over the last 3 months and remains strong in both NI & RoI Construction Sector Output - PMI 3 month moving average PMI Index 70 UK RoI Expansion NI 60 Contraction 50 40 30 Source: Markit Economics 20 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
  • New orders growth accelerating in the UK & NI and remains strong in the RoI 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 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-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 50 Contraction 40 30 Source: Markit Economics 20 Jan-05 Jul-06 Jan-08 Jul-09 Jan-11 Jul-12 Jan-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 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-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