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Ulster Bank NI PMI Slide Pack, April 2013
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Ulster Bank NI PMI Slide Pack, April 2013

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Slide pack for the Ulster Bank Northern Ireland PMI, April 2013

Slide pack for the Ulster Bank Northern Ireland PMI, April 2013

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  • 1. Ulster Bank Northern Ireland Purchasing Managers Index (PMI)Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sectorApril 2013 Survey Update Issued 13th May 2013Richard RamseyChief Economist Northern Irelandrichard.ramsey@ulsterbankcm.com
  • 2. 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.
  • 3. Global output growth eases in April…Global Output - PMI253035404550556065Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Total Manufacturing ServicesSource: Markit EconomicsExpansionContraction
  • 4. … but all sectors within the Eurozone are still contractingEurozone PMIs: Output253035404550556065Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Composite (M&S) Manufacturing Services ConstructionSource: Markit Economics Output IndicesExpansionContraction
  • 5. Australia, Spain & France post the steepest falls inmanufacturing output. Denmark posts strongest gainPMIs: Manufacturing Output April 201330 35 40 45 50 55 60 65AustraliaSpainFranceGreeceItalyPolandEZIrelandEUGermanyAustriaNINetherlandsCanadaSingaporeIndiaTurkeyUKCzech RepublicChinaGlobalRussiaVietnamIsrael*IndonesiaBrazilTaiwanJapanS.AfricaMexicoN.Zealand*SwitzerlandUSS.KoreaDenmarkSource: Markit Economics Output Indices,*MarchUK, NI & RoI
  • 6. Services output expanding for BRICs, US, Japan, UK &Ireland. Australia, France & Spain post the steepest declinesPMIs: Services Output April 201340 45 50 55 60AustraliaFranceSpainItalyEZEUGermanyNIIndiaChinaBrazilEmerging MarketsJapanGlobalUKRussiaUS*IrelandSource: Markit Economics Output Indices, *US Non-manufacturing which is wider thanservices€
  • 7. The four largest economies within the eurozone are nowcontractingComposite PMIs(Manufacturing & Services ** Excludes Construction**)3035404550556065Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Source: Markit Economics PMIsContractionExpansion
  • 8. The US & China signal a loss in momentum in AprilComposite PMIs(Manufacturing & Services ** Excludes Construction**)35404550556065Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Eurozone US (ISM) China UKSource: Markit EconomicsExpansionContraction
  • 9. … but Japan’s PMI overtakes the US and China. Adepreciating yen is aiding Japanese manufacturing…Manufacturing PMIs253035404550556065Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13US (ISM) China Japan EurozoneSource: Markit EconomicsContractionExpansion
  • 10. … but strong Aussie $ and a slowdown in Asia ispushing Australia ‘Down Under’Australia - PMI3035404550556065Dec-07 Aug-08 Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13Manufacturing Services No ChangeSource: Markit Economics PMIsContractionExpansion
  • 11. UK & the RoI post a pick-up in business activity in Aprilwhilst the rate of contraction remains unchanged for NIPrivate Sector Business Activity - PMIs3035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13NI UK RoISource: Markit & Ulster Bank NI PMI: 50 = thresholdbetween expansion / contractionExpansionContraction**PMI Surveys Exclude Agriculture & Public Sector**
  • 12. PMI is more negative than DFP’s new private sector composite indexsuggests (combines DFP indices for construction, services, agriculture & industrial production)NI Private Sector Output Index Versus NI PMI-5-4-3-2-10123452002 Q4 2004 Q2 2005 Q4 2007 Q2 2008 Q4 2010 Q2 2011 Q4 2013 Q2*PSO Q/Q%3035404550556065PMINI PSO Index Left Hand Scale UB PMI Right Hand ScaleSource: New DFP Northern Ireland Composite EconomicIndex (NICEI) & Ulster Bank / Markit Economics NI PMI,* refers to April 201350 mark is the threshold for expansion / contraction with PMIExpansionContraction
  • 13. NI output, new orders and employment all postmodest contractions over the last 3 monthsNI Private Sector Activity3 month moving average303540455055606570Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Business Activity New Business EmploymentSource: Markit Economics & Ulster Bank NI PMIExpansionContraction
  • 14. Pace of contraction in NI new orders continues. Rateof growth eases in RoI & accelerates in the UKPrivate Sector New OrdersMonthly3035404550556065Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13NI UK RoISource: Markit Economics & Ulster Bank NI PMIOrdersincreasingOrdersContracting
  • 15. NI’s levels of work outstanding sees its pace of declineease markedly over the last 3 monthsPrivate Sector Backlogs3 month moving average30354045505560Apr-03 Dec-04 Aug-06 Apr-08 Dec-09 Aug-11 Apr-13NI UK RoISource: Markit Economics & Ulster Bank NI PMIIncreasingDecreasing
  • 16. The pace of decline in export orders eases in AprilNI New Export BusinessMonthly20253035404550556065Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13New Export Orders No ChangeSource: Markit Economics & Ulster Bank NI PMIGrowthAcceleratingContractionAccelerating
  • 17. PMI underestimated job gains in Q2 & Q3 (relative to official jobssurvey) marginal job losses in Q4 2012. PMI signals a flat Q1 2013NI Employment: PMI v QES*354045505560Jun-03 Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Apr-13PMI 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 Index No Change QES Q/QDiscontinuity in QES SeriesJoblossesJobgains*QES is DFPs official Quarterly Employment Survey of thenumber of jobs in NI & includes the public sectorSource: DFP, Ulster Bank & Markit Economics, PMIIndex 50.0 denotes threshold between expansion /contraction,PMI 3mth averages except April-13(monthly)
  • 18. The UK & the RoI record further job gains in April.Conversely, firms in NI report a fall in employment levelsPrivate Sector Employment LevelsMonthly30354045505560Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13NI UK RoISource: Markit Economics & Ulster Bank NI PMIJobGainsJobLosses
  • 19. Strong input cost inflation coupled with output pricedeflation means the profitability squeeze continuesNI Private Sector Profit Squeeze3 Month Moving Average304050607080Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Output Prices Input Prices No ChangeInflationDeflationSource: Markit Economics & Ulster Bank NI PMIProfitssqueezePrice of goods &services falling
  • 20. RegionalComparisons
  • 21. 3 UK regions post a contraction in business activityOutput / Business ActivityApril 201350 = No change48.951.052.14045505560Wal Y&H EM Lon Scot UK SE East SW NW WM NE NI RoIPMI indexExpansionContractionSource: Markit Economics & Ulster Bank NI PMI
  • 22. The North East posts the sharpest rate of decline over thelast 3 months followed by NI…Output / Business Activity3 months to April 201350 = No change48.751.350.9404244464850525456Wal Y&H Lon Scot EM SE East UK NW WM SW NI NE RoIPMI IndexSource: Markit Economics & Ulster Bank NI PMIExpansionContraction
  • 23. …but NI has posted the steepest decline over thelast 12 monthsOutput / Business Activity12 months to April 201350 = No change51.5514540455055Lon Y&H Wal EM Scot SE WM UK East NW SW NE NI RoIPMI indexExpansionContractionSource: Markit Economics & Ulster Bank NI PMI
  • 24. Four English regions & NI report falling employmentlevels in March …Employment LevelsApril 201350 = No change50.751.047.3444648505254WM SE Wal EM Scot UK East SW Lon NE NW Y&H NI RoIPMI IndexIncreasingDecreasingSource: Markit Economics & Ulster Bank NI PMI
  • 25. …and 4 UK regions (incl. NI) post job losses over last 3months…Employment LevelsLast 3 months to April 201350 = No change48.450.651.3444648505254WM SE Wal East EM Scot Lon UK NE SW NW NI Y&H RoIPMI IndexIncreasingDecreasingSource: Markit Economics & Ulster Bank NI PMI
  • 26. NI posts the steepest decline in employment over thelast 12 monthsEmployment Levels12 months to April 201350 = No change50.151.247.742444648505254EM WM SE Scot East UK Y&H Wal Lon SW NW NE NI RoIPMI IndexIncreasingDecreasingSource: Markit Economics & Ulster Bank NI PMI
  • 27. SectoralComparisons
  • 28. UK service sector growth accelerates in April withmanufacturing back above the 50 thresholdUK Business Activity / Output - PMIs203040506070Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Services Manufacturing ConstructionSource: Markit EconomicsExpansionContraction
  • 29. ‘Triple-dip’ recession avoided. UK composite PMI forApril suggests further growth in Q2UK GDP versus UK Composite PMI2530354045505560652006Q32007Q22008Q12008Q42009Q32010Q22011Q12011Q42012Q32013Q2*PMI Index-2.5-2-1.5-1-0.500.511.5GDP Q/QGDP Q/Q PMI PMI No ChangeSource: ONS & Markit Economics, * refers to Apr-13 only
  • 30. RoI’s services sector sees a pick up in growth but the rateof decline accelerates for construction & manufacturingRoI Business Activity - PMIs3 month moving average20253035404550556065Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Manufacturing Services Construction No ChangeSource: Markit EconomicsExpansionContraction
  • 31. NI services & construction sectors contracting butmanufacturing is growingNI Private Sector Output3 month moving average3035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Manufacturing Services ConstructionSource: Markit Economics & Ulster Bank NIPMIExpansionContraction
  • 32. …with all three sectors reporting falling employmentlevelsNI PMI - Employment Index3 month moving average253035404550556065Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Manufacturing Services ConstructionSource: Markit Economics & Ulster Bank NI PMIJobGainsJobLosses
  • 33. Manufacturing posts output & new orders growth overthe last three months with modest fall in employmentNI Manufacturing Activity3 month moving average253035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Business activity New Orders EmploymentSource: Markit Economics & Ulster Bank NIGrowthacceleratingContractionaccelerating
  • 34. NI outperforming the UK and the RoI in terms ofmanufacturing output growthManufacturing Output3 month moving average3035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13UK NI RoI No ChangeSource: Markit Economics & Ulster Bank NI PMIContractionExpansion
  • 35. NI posts the strongest growth in new ordersManufacturing New Orders3 month moving average253035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13UK NI RoI No ChangeSource: Markit Economics & Ulster Bank NI PMIContractionExpansion
  • 36. N.Ireland is outperforming its European competitors,aided by sterling’s ongoing weaknessManufacturing Output - PMI203040506070Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13RoI Italy Spain Greece NISource: Markit Economics PMIs, NI is 3 month moving averageContractionExpansion
  • 37. Cost price inflation easing for local manufacturing firmsand output prices are rising (return of pricing power)NI Manufacturing Input & Output Inflation3 month moving average304050607080Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13No Change Input Costs Output PricesInflationDeflationSource: Markit Economics & Ulster Bank NI PMIProfitssqueeze
  • 38. PMI signals job gains in Q1 2013 followed by a fall inemployment levels in AprilNI Manufacturing Employment: PMI v QES*3035404550556065Jun-03 Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Apr-13PMI Index-5%-4%-3%-2%-1%0%1%2%3%4%Q/QPMI Employment Index No Change QES Q/QDiscontinuity inQES SeriesJoblossesJobgains*QES is DFPs official Quarterly EmploymentSurvey of the number of jobs in NI firmsSource: DFP, Ulster Bank & Markit Economics, PMIIndex 50.0 denotes threshold between expansion /contraction,PMI 3mth averages except April-13(monthly)
  • 39. RoI & UK growth continues while NI’s pace of declineeasesServices Output (excluding Retail)3 month moving average303540455055606570Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13UK NI RoI No ChangeSource: Markit Economics & Ulster Bank NI PMIContractionExpansion
  • 40. New orders growth slowing in the RoI & picking up in theUK. Meanwhile NI is still contracting albeit at a weaker rateServices New Orders (excluding Retail )3 month moving average3040506070Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13UK NI RoI No ChangeSource: Markit Economics & Ulster Bank NI PMIContractionExpansion
  • 41. NI’s services sector raised prices for its goods &services in April for the first time since September 2008NI Services Input & Output Inflation3 month moving average304050607080Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13No Change Input Costs Output PricesInflationDeflationSource: Markit Economics & Ulster Bank NI PMIProfitssqueeze
  • 42. …with employment levels still falling in NI over thelast three monthsServices Employment3 month moving average3035404550556065Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13UK RoI NI No ChangeSource: Markit Economics & Ulster Bank NI PMIContractionExpansion
  • 43. The services PMI underestimated modest employmentgains in Q2-Q4 & signals modest decline in Q1 2013NI Services Employment: PMI v QES*404550556065Jun-03 Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Apr-13PMI Index-1.0%-0.5%0.0%0.5%1.0%1.5%Q/QPMI Employment Index No Change QES Q/QDiscontinuity in QES SeriesJob lossesJobgains*QES is DFPs official Quarterly Employment Survey of the numberof jobs in NI and includes the public sectorSource: DFP, Ulster Bank & Markit Economics, PMIIndex 50.0 denotes threshold between expansion /contraction,PMI 3mth averages except April-13(monthly)
  • 44. Local retailers still reporting falling orders & activityNorthern Ireland Retail PMI3 monthly average253545556575Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Business Activity New Orders Backlogs No ChangeSource: Markit Economics & Ulster Bank NI PMIExpansionContraction
  • 45. Profits squeeze on local retailers appears to be easingNI Retail Input & Output Inflation3 month moving average30405060708090Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13Input Costs Output Prices No ChangeInflationDeflationSource: Markit Economics & Ulster Bank NIProfitssqueeze
  • 46. NI construction sector still in the midst of a severe downturnNI Construction PMI3 month moving average2030405060Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-13Output New Orders EmploymentSource: Markit Economics, Ulster Bank PMIExpansionContraction50 = No change
  • 47. …with profits squeeze continuingNI Construction Sector Profits Squeeze3 month moving average203040506070Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-13PMI IndexInput Prices Output Prices No ChangeSource: Markit Economics & Ulster Bank PMIInflationDeflation
  • 48. NI PMI has been a reasonably good predictor of actualjob losses in the official employment surveys (QES)NI Construction Employment: PMI v QES20253035404550556065Jun-03 Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Apr-13PMI Index-10.0%-7.5%-5.0%-2.5%0.0%2.5%5.0%Q/QPMI Employment Index No Change QES Q/QDiscontinuity in QES SeriesJob lossesJobgains*QES is NIs official Quarterly Employment Survey of the no. of jobs in NI firmsSource: DFP, Ulster Bank & Markit Economics, PMIIndex 50.0 denotes threshold between expansion /contraction,PMI 3mth averages except April-13(monthly)
  • 49. UK, RoI & NI all post contractions in construction outputConstruction Sector Output - PMI3 month moving average2030405060Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-13PMI IndexNI UK RoISource: Markit EconomicsExpansionContraction
  • 50. … and with new orders falling in NI, UK & RoIConstruction Sector New Orders - PMI3 month moving average2030405060Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-13PMI IndexNI UK RoISource: Markit EconomicsExpansionContraction
  • 51. Growth opportunities for NI firms within GB will waneas activity easesUK Construction Activity - PMIs3 month moving average203040506070Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Housing Activity Commercial Activity Civil Engineering ActivitySource: Markit EconomicsExpansionContraction
  • 52. Lack of opportunities in the RoI with all constructionsub-sectors declining in AprilRepublic of Ireland Construction Activity - PMI3 month moving average203040506070Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13Housing Activity Commercial Activity Engineering ActivitySource: Markit Economics & Ulster BankExpansionContraction50 = No change
  • 53. Slide 53DisclaimerThis 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.

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