Ulster Bank NI PMI Slidepack

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

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Ulster Bank NI PMI Slidepack

  1. 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 March 2014 Survey Update  Issued 14th April 2014 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com Twitter @UB_Economics
  2. 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. 3. Global output begins 2014 on a firmer footing than it started 2013 but manufacturing growth eases in March Global Output - PMI 25 30 35 40 45 50 55 60 65 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Total Manufacturing Services Source: Markit Economics ExpansionContraction
  4. 4. The Eurozone started 2013 will all sectors contracting now only construction is waiting for a return to growth Eurozone PMIs: Output 25 30 35 40 45 50 55 60 65 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Composite (M&S) Manufacturing Services Construction Source: Markit Economics ExpansionContraction
  5. 5. Most economies post manufacturing output growth in March PMIs: Manufacturing Output March 2014 35 40 45 50 55 60 65 70 75 China Russia Australia Indonesia S.Korea Singapore S.Africa Brazil Austria Mexico Turkey India Vietnam France Canada Global Greece Spain Japan Taiwan NI EZ Poland Italy US EU Netherlands Ireland Germany UK Switzerland N.Zealand* Czech Republic Denmark Source: Markit Economics Output Indices, *February. For the US ISM is used. UK, NI & RoI €
  6. 6. The Republic of Ireland & Northern Ireland posted the fastest rates of service sector output growth in March PMIs: Services Output March 2014 35 40 45 50 55 60 65 India Russia Australia Italy Emerging Markets Brazil France China Japan EZ Germany US* Global EU Spain UK NI Ireland Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services €
  7. 7. France, Spain & Ireland see growth accelerate in March while Germany, UK & Italy see growth ease Composite PMIs (Manufacturing & Services ** Excludes Construction**) 25 30 35 40 45 50 55 60 65 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Source: Markit Economics PMIs ContractionExpansion
  8. 8. The US was the only Composite PMI to improve in March Composite PMIs (Manufacturing & Services ** Excludes Construction**) 35 40 45 50 55 60 65 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Eurozone US (ISM) China UK Source: Markit Economics PMIs, US includes construction ExpansionContraction
  9. 9. The US saw its PMI rebound after the adverse weather conditions in January & February Manufacturing PMIs 25 30 35 40 45 50 55 60 65 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 US (ISM) China Japan Eurozone No Change Source: Markit Economics ContractionExpansion
  10. 10. Emerging markets slowdown continues. Russian PMI is contracting at its fastest rate since May 2009… Composite PMIs (Manufacturing & Services ** Excludes Construction**) 30 35 40 45 50 55 60 65 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Brazil Russia India Emerging Markets Source: Markit Economics ContractionExpansion
  11. 11. Australia’s services & manufacturing sector ‘Down under’ the 50 threshold in March Australia - PMI 30 35 40 45 50 55 60 65 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Manufacturing Services No Change Source: Markit Economics PMIs ContractionExpansion
  12. 12. The UK & NI see their growth rates ease in March with the RoI firms signalling a pick-up in their growth rates Private Sector Business Activity - PMIs 30 35 40 45 50 55 60 65 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 NI UK RoI Source: Markit & Ulster Bank NI PMI 50 = threshold between expansion / contraction ExpansionContraction **PMI Surveys Exclude Agriculture & Public Sector**
  13. 13. 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 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3 2014 Q1 PSO Q/Q% 30 35 40 45 50 55 60 65 PMI NICEI Left Hand Scale PMI Right Hand Scale Source: NewDFP Northern Ireland Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI 50 mark is the threshold for expansion / contraction with PMI Expansion Contraction
  14. 14. NI’s recovery took hold in the second half (H2) of 2013 NI Private Sector Performance (PMI) 30 35 40 45 50 55 60 2007H 1 2007H 2 2008H 1 2008H 2 2009H 1 2009H 2 2010H 1 2010H 2 2011H 1 2011H 2 2012H 1 2012H 2 2013H 1 2013H 2 PMI Index Business Activity New Orders Employment Export Orders ExpansionContraction Source: Markit Economics & Ulster Bank NI
  15. 15. NI firms report an easing in rates of output growth but employment growth & new orders growth accelerates NI Private Sector Activity Monthly 30 35 40 45 50 55 60 65 70 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 Business Activity New Business Employment Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction
  16. 16. Buoyant order books suggest more growth in the months ahead. But pace of UK growth slowing from a strong position Private Sector New Orders Monthly 30 35 40 45 50 55 60 65 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 NI UK RoI Source: Markit Economics & Ulster Bank NI OrdersincreasingOrdersContracting
  17. 17. Surge in demand has led to backlogs of work particularly within the UK & NI Private Sector Backlogs 3 month moving average 30 35 40 45 50 55 60 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 NI UK RoI Source: Markit Economics & Ulster Bank NI PMI IncreasingDecreasing
  18. 18. NI firms post their 9th successive rise in export orders NI New Export Business 20 30 40 50 60 70 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 New Export Orders No Change Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction
  19. 19. PMI for Q1 signals fastest rate of jobs growth in 7 years NI Employment: PMI v QES* 35 40 45 50 55 60 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 PMI Index -1.5% -1.3% -1.0% -0.8% -0.5% -0.3% 0.0% 0.3% 0.5% 0.8% 1.0% Q/Q PMI Employment Index No Change QES Q/Q *QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector Discontinuity in QES Series Job losses Job gains Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction
  20. 20. UK & RoI firms report an easing in rate of job creation while employment growth expands at a record rate for NI firms Private Sector Employment Levels Monthly 30 35 40 45 50 55 60 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 NI UK RoI Source: Markit Economics & Ulster Bank NI PMI JobGainsJobLosses
  21. 21. Input & output cost inflation eases over the 3 months to March NI Private Sector Profit Squeeze 3 Month Moving Average 30 40 50 60 70 80 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Output Prices Input Prices No Change InflationDeflation Source: Markit Economics & Ulster Bank NI PMI Profits squeeze Price of goods & services rising
  22. 22. Regional Comparisons
  23. 23. Strong growth across all UK regions & the RoI in March Output / Business Activity March 2014 50 = No change 56.6 58.1 59.1 40 45 50 55 60 65 70 Wal Lon SW East WM EM UK SE NE NI Scot NW Y&H RoI PMI Index ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI
  24. 24. …all the UK regions & the RoI post strong rates of growth over the last 3 months… Output / Business Activity 3 months to March 2014 50 = No change 58.4 57.3 58.6 40 45 50 55 60 65 70 WM SW SE Wal East Lon UK NI NW Y&H EM NE Scot RoI PMI Index Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction
  25. 25. … and over the last 12 months Output / Business Activity 12 months to March 2014 50 = No change 55.6 58.3 55.9 40 45 50 55 60 65 Lon SE SW NW UK WM Wal EM East Y&H Scot NI NE RoI PMI Index ExpansionContraction Source: Markit Economics & Ulster Bank NI PMI
  26. 26. NI posts the fastest rate of employment growth of all the UK regions and slightly below that of the RoI Employment Levels March 2014 50 = No change 56.6 54.4 56.9 46 48 50 52 54 56 58 60 62 NI NW Y&H UK SW East Wal Scot Lon SE NE EM WM RoI PMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI
  27. 27. All UK regions and the RoI post employment growth over the last 3 months Employment Levels 3 months to March 2014 50 = No change 55.3 55.1 56.6 46 48 50 52 54 56 58 60 NW SW Lon UK East Y&H NI SE Scot NE Wal WM EM RoI PMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI
  28. 28. In 2013 NI posted its 1st annual increase in private sector employment since 2007 with trend continuing in 2014 Employment Levels 12 Months to March 2014 50 = No change 53.7 54.6 51.8 46 48 50 52 54 56 58 SW Lon NW WM East UK SE Scot Wal Y&H NI NE EM RoI PMI Index IncreasingDecreasing Source: Markit Economics & Ulster Bank NI PMI
  29. 29. Sectoral Comparisons
  30. 30. All sectors post strong growth in March although manufacturing & services lose some momentum UK Business Activity / Output - PMIs 20 30 40 50 60 70 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Services Manufacturing Construction Source: Markit Economics ExpansionContraction
  31. 31. UK posts strong rates of economic growth in Q2-Q4 with further growth expected in Q1 2014 UK GDP versus UK Composite PMI UK Composite includes Construction 25 30 35 40 45 50 55 60 65 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 PMI Index -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 GDP Q/Q GDP Q/Q PMI PMI No Change Source: ONS & Markit Economics
  32. 32. RoI output growth accelerates across all sectors in March RoI Business Activity - PMIs Monthly 20 25 30 35 40 45 50 55 60 65 70 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Manufacturing Services Construction No Change Source: Markit Economics ContractionExpansion
  33. 33. All 3 broad sectors within NI saw a marked turnaround in business activity in H2 2013 NI Private Sector Business Activity (PMI) 30 35 40 45 50 55 60 65 2007H 12007H22008H 12008H 22009H12009H 22010H 12010H22011H 12011H 22012H12012H 22013H 12013H2 PMI Index Manufacturing Services Construction Retail ExpansionContraction Source: Markit Economics & Ulster Bank NI
  34. 34. All 3 broad sectors within NI continue to report robust rates of output growth in Q1 2014 Northern Ireland Private Sector Output 3 month moving average 30 35 40 45 50 55 60 65 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 Manufacturing Services Construction Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction
  35. 35. with all sectors reporting employment growth over the last 3 months with manufacturing & construction at record rates NI PMI - Employment Index 3 month moving average 25 30 35 40 45 50 55 60 65 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 Manufacturing Services Construction Source: Markit Economics & Ulster Bank NI PMI JobGainsJobLosses
  36. 36. NI manufacturing firms report an easing in output & orders but a surge in job creation NI Manufacturing Activity 3 month moving average 25 30 35 40 45 50 55 60 65 Mar-03 Jan-05 Nov-06 Sep-08 Jul-10 May-12 Mar-14 Business activity New Orders Employment Source: Markit Economics & Ulster Bank NI GrowthacceleratingContractionaccelerating
  37. 37. UK & NI manufacturing firms continue to post strong rates of growth in output during the last 3 months Manufacturing Output 3 month moving average 30 35 40 45 50 55 60 65 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 UK NI RoI No Change Source: Markit Economics & Ulster Bank NI PMI ContractionExpansion
  38. 38. The UK posts the strongest rate of growth in new orders, albeit slowing, while RoI & NI post a pick-up in orders growth Manufacturing New Orders 3 month moving average 25 30 35 40 45 50 55 60 65 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 UK NI RoI No Change Source: Markit Economics & Ulster Bank NI PMI ContractionExpansion
  39. 39. NI has been outperforming some of its European competitors Manufacturing Output - PMI 20 30 40 50 60 70 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 RoI Italy Spain Greece NI Source: Markit Economics PMIs ContractionExpansion
  40. 40. NI manufacturers post the slowest rate of input cost inflation in March in 21 months NI Manufacturing Input & Output Inflation 3 month moving average 30 40 50 60 70 80 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 No Change Input Costs Output Prices InflationDeflation Source: Markit Economics & Ulster Bank NI PMI Profits squeeze
  41. 41. In Q1 2014, PMI signals the fastest rate of manufacturing employment growth since the survey began NI Manufacturing Employment: PMI v QES* 30 35 40 45 50 55 60 65 2003 Q1 2005 Q4 2008 Q3 2011 Q2 2014 Q1 PMI Index -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% Q/Q PMI Employment Index No Change QES Q/Q Discontinuity in QES Series Job losses Job 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
  42. 42. Service sector experiences expansion in output & employment in March NI Service Sector (excludes Retail) 3 month moving average 30 35 40 45 50 55 60 65 70 Mar-03 Jan-05 Nov-06 Sep-08 Jul-10 May-12 Mar-14 Business activity New Orders Employment Source: Markit Economics & Ulster Bank NI GrowthacceleratingContractionaccelerating
  43. 43. All 3 economies post strong rates of growth in services output in March with the RoI leading the way … Services Output (excluding Retail) 3 month moving average 30 35 40 45 50 55 60 65 70 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 UK NI RoI No Change Source: Markit Economics & Ulster Bank NI PMI ContractionExpansion
  44. 44. … and new orders growth remains strong too Services New Orders (excluding Retail ) 3 month moving average 30 40 50 60 70 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 UK NI RoI No Change Source: Markit Economics & Ulster Bank NI PMI ContractionExpansion
  45. 45. Input cost & output price inflation ease within service sector firms in March with pricing power negative NI Services Input & Output Inflation 3 month moving average 30 40 50 60 70 80 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 No Change Input Costs Output Prices InflationDeflation Source: Markit Economics & Ulster Bank NI Profits squeeze
  46. 46. Service sector employment growth accelerates within the RoI & NI over the last 3 months to March Services Employment 3 month moving average 30 35 40 45 50 55 60 65 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 UK RoI NI No Change Source: Markit Economics & Ulster Bank NI PMI ContractionExpansion
  47. 47. In Q1 the services PMI showed its fastest rate of jobs growth since Q4 2007 NI Services Employment: PMI v QES* 40 45 50 55 60 65 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 PMI Index -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Q/Q PMI Employment Index No Change QES Q/Q Discontinuity in QES Series Job losses Job 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
  48. 48. NI retailers report a marked slowdown in sales and new orders in March from its recent highs Northern Ireland Retail PMI 3 monthly average 25 35 45 55 65 75 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 Business Activity New Orders Backlogs No Change Source: Markit Economics & Ulster Bank NI PMI ExpansionContraction
  49. 49. Local retailers maintain pricing power in March NI Retail Input & Output Inflation 3 month moving average 30 40 50 60 70 80 90 Mar-04 Nov-05 Jul-07 Mar-09 Nov-10 Jul-12 Mar-14 Input Costs Output Prices No Change InflationDeflation Source: Markit Economics & Ulster Bank NI Profits squeeze
  50. 50. NI construction sector continues to report growth in output, new orders & employment over the last 3 months NI Construction PMI 3 month moving average 20 30 40 50 60 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Output New Orders Employment Source: Markit Economics, Ulster Bank PMI ExpansionContraction 50 = No change
  51. 51. …and output prices have been rising at a record rate NI Construction Sector Profits Squeeze 3 month moving average 20 30 40 50 60 70 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 PMI Index Input Prices Output Prices No Change Source: Markit Economics & Ulster Bank Inflation Deflation
  52. 52. NI’s construction PMI posts its third successive quarterly rise in employment in Q1 2014 NI Construction Employment: PMI v QES* 20 25 30 35 40 45 50 55 60 65 2004 Q1 2006 Q3 2009 Q1 2011 Q3 2014 Q1 PMI Index -10.0% -7.5% -5.0% -2.5% 0.0% 2.5% 5.0% Q/Q PMI Employment Index No Change QES Q/Q Discontinuity in QES Series Job losses Job 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
  53. 53. Construction output growth remains strong particularly within the UK Construction Sector Output - PMI 3 month moving average 20 30 40 50 60 70 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 PMI Index NI UK RoI Source: Markit Economics ExpansionContraction
  54. 54. NI new orders growth hits a record high in March and suggests significant work remains in the pipeline Construction Sector New Orders - PMI 3 month moving average 20 30 40 50 60 70 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 PMI Index NI UK RoI Source: Markit Economics ExpansionContraction
  55. 55. Opportunities for NI firms within GB. House building has recently been expanding at its fastest rate in over 11 years UK Construction Activity - PMIs 3 month moving average 20 30 40 50 60 70 Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14 Housing Activity Commercial Activity Civil Engineering Activity Source: Markit Economics ExpansionContraction
  56. 56. …with opportunities returning within the RoI too Republic of Ireland Construction Activity - PMI 3 month moving average 20 30 40 50 60 70 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Housing Activity Commercial Activity Engineering Activity Source: Markit Economics & Ulster Bank ExpansionContraction 50 = No change
  57. 57. Slide 57 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.

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