Slide pack , Ulster Bank Northern Ireland PMI, December 2014

Ulster Bank Northern Ireland
Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
December 2014 Survey Update
Issued 12th January 2015
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 eases to a 14-month low
Global Output - PMI
25
30
35
40
45
50
55
60
65
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Total Manufacturing Services
Source: Markit Economics
ExpansionContraction

Eurozone manufacturing sector growth eases with
retail & construction output still contracting
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Composite (M&S) Manufacturing Services
Construction Retail No Change

The Eurozone’s composite PMI signals economic
growth easing in Q4
EZ GDP versus EZ Composite PMI
Composite excludes construction
20
25
30
35
40
45
50
55
60
65
70
2006 Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4
PMI Index
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
GDP % Q/Q
GDP Q/Q PMI
Source: Bloomberg & Markit Economics
EZ Q3-14
GDP 0.2%

Top, middle and near the bottom describes the relative
manufacturing output performance of the RoI, UK & NI
PMIs: Manufacturing Output December 2014
35 40 45 50 55 60 65 70 75
France
Australia
Indonesia
NI
Taiwan
S.Korea
Brazil
Italy
Singapore
China
Russia
Austria
Greece
EZ
EU
Germany
Turkey
Global
UK
Japan
Vietnam
Denmark
Czech Republic
Netherlands
Spain
US
Poland
Canada
S.Africa*
Switzerland
N.Zealand*
India
Mexico
Ireland
Source: Markit Economics Output Indices, *November
RoI, UK & NI
€

The Republic of Ireland, UK & Spain posted the fastest
rates of service sector output growth in December
PMIs: Services Output December 2014
35 40 45 50 55 60 65
Russia
Australia
Brazil
Italy
France
India
EZ
Japan
Emerging Markets
Germany
Global
Developed Markets
EU
NI
US*
China
Spain
UK
Ireland
Source: Markit Economics Output Indices
€

Ireland, Spain & Germany post an acceleration in growth
in December, with Italy & France still in contraction mode
Composite PMIs
(Manufacturing & Services ** Excludes Construction**)
25
30
35
40
45
50
55
60
65
Source: Markit Economics PMIs
ContractionExpansion

The US & UK Composite PMIs post a marked slowdown in
December with Japan reporting a pick-up in activity
Composite PMIs
30
35
40
45
50
55
60
65
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Eurozone US (Markit) China Japan No Change UK
Source: Markit Economics PMIs, US begins Jul-11

The US continues to enjoy a robust manufacturing
recovery whilst the EZ continues to flirt with stagnation
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
US (ISM) China Japan Eurozone No Change

Emerging markets growth rises to a 3-month high
with Brazil & Russia still in contraction mode
Composite PMIs
30
35
40
45
50
55
60
65
Brazil Russia India Emerging Markets

Australia’s services & manufacturing sectors remain
‘Down Under’ the 50 threshold in December
Australia - PMI
30
35
40
45
50
55
60
65
Manufacturing Services No Change

NI records its first month of contraction, albeit
marginal, since mid-2013
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Dec-04 Aug-06 Apr-08 Dec-09 Aug-11 Apr-13 Dec-14
NI UK RoI
Source: Markit & Ulster Bank NI PMI
50 = threshold between expansion / contraction
**PMI Surveys Exclude Agriculture & Public Sector**

PMI suggests growth in DFP’s private sector composite index (combines
indices for construction, services, agriculture & industrial production) throughout 2014
NI Private Sector Output Index Versus NI PMI
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
2004 Q2 2005 Q4 2007 Q2 2008 Q4 2010 Q2 2011 Q4 2013 Q2 2014 Q4
NICEI Q/Q%
30
35
40
45
50
55
60
65
PMI
NICEI Left Hand Scale PMI Right Hand Scale
Source: DFP NI Composite Economic Index (NICEI) &
Ulster Bank / Markit Economics NI PMI,Q2 2014 is
latest data for NICEI
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
E i

2014 was the first year in 7 years that business activity,
new orders, employment & export orders all expanded
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
2007 2008 2009 2010 2011 2012 2013 2014
PMI Index
Business Activity New Orders Employment Export Orders
Source: Markit Economics & Ulster Bank NI

NI’s recovery took hold in H2 of 2013 with all indicators
improving in H1 2014 but easing in H2 2014
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
65
2006H
22007H
12007H
22008H
12008H
22009H
12009H
22010H
12010H
22011H
12011H
22012H
12012H
22013H
12013H
22014H
12014H
2
PMI Index
Business Activity New Orders Employment Export Orders
Source: Markit Economics & Ulster Bank NI PMI

The pace of growth in output, new orders &
employment continued to slow in December
NI Private Sector Activity
Monthly
30
35
40
45
50
55
60
65
70
Business Activity New Business Employment

NI order books are growing at their weakest rate in
19 months but are still increasing
Private Sector New Orders
3 month moving average
30
35
40
45
50
55
60
65
NI UK RoI
OrdersincreasingOrdersContracting

Backlogs of work continue to grow in the UK & RoI but
NI posts a 3rd month of contraction as activity slows
Private Sector Backlogs
30
35
40
45
50
55
60
NI UK RoI
IncreasingDecreasing

Export orders flat in December following November’s
first monthly decline in 17 months
NI New Export Business
20
30
40
50
60
70
New Export Orders No Change

PMI signals the fastest rate of jobs growth in 7 years
in Q2 with the pace of job creation easing in Q3/Q4
NI Employment: PMI v QES**
35
40
45
50
55
60
2004 Q4 2006 Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4
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.

Job creation accelerates at a record rate in the RoI but
the pace of jobs growth slows to an 18-mth low for NI
Private Sector Employment Levels
Monthly
30
35
40
45
50
55
60
NI UK RoI
JobGainsJobLosses

Inflationary pressures relatively subdued with output
prices falling
NI Private Sector Profit Squeeze
3 Month Moving Average
30
40
50
60
70
80
Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14
Output Prices Input Prices No Change
InflationDeflation
Profits
squeeze
Price of goods
& services

NI was the only UK region to see a contraction in output in
December with the strongest growth rate posted in the RoI
Output / Business Activity
December 2014
50 = No change
49.8
55.4
61.1
40
45
50
55
60
65
Wal NE Lon SE EM WM East UK Y&H SW NW Scot NI RoI
PMI Index

Most of the UK regions & the RoI posted strong rates of
growth in Q4 but NI is at the foot of regional league table
Q4 2014
50 = No change
56.5
52.4
60.6
40
45
50
55
60
65
Wal SE WM East Y&H NE EM UK Lon NW SW Scot NI RoI
PMI Index

The RoI reported the fastest rate of growth in business
activity in 2014 with Scotland posting the slowest rate
2014
50 = No change
57.3
58.2
59.7
44
47
50
53
56
59
62
65
SE NE Wal East WM Lon UK EM Y&H NW SW NI Scot RoI
PMI Index

NI posts the weakest rate of jobs growth within the UK
in December with the RoI reporting the strongest rate
Employment Levels
December 2014
50 = No change
50.1
59.8
55
46
48
50
52
54
56
58
60
East WM Wal Y&H UK Lon NW Scot EM SW SE NE NI RoI
PMI Index

NI and the North East of England post the weakest
rates of employment creation within the UK in Q4
Employment Levels
Q4 2014
50 = No change
55.5
51.2
59
46
48
50
52
54
56
58
60
East Y&H WM UK Lon Wal EM SW SE Scot NW NI NE RoI
PMI Index

Wales & the North East posted the weakest rates of jobs
growth in 2014 with the RoI reporting the strongest rates
Employment Levels
2014
50 = No change
55.9
53.9
57.6
46
48
50
52
54
56
58
60
East Y&H NW UK Lon SW SE WM EM NI Scot Wal NE RoI
PMI Index

Slowdown in business activity across all sectors although
rates of growth remain strong in services & construction
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Services Manufacturing Construction

UK posts strong rates of economic growth between Q1-13
& Q3-14 with further strong growth expected in Q4-14
UK GDP versus UK Composite PMI
UK Composite includes Construction
25
30
35
40
45
50
55
60
65
2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4
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

RoI output growth remains robust across all sectors
RoI Business Activity - PMIs
Monthly
20
25
30
35
40
45
50
55
60
65
70
Manufacturing Services Construction No Change

All sector’s experienced weaker growth in the second
half of the year relative to H1-14
NI Private Sector Business Activity (PMI)
30
35
40
45
50
55
60
65
2006H
22007H12007H
22008H
12008H
22009H12009H
22010H12010H
22011H12011H
22012H12012H
22013H
12013H
22014H
12014H
2
PMI Index
Manufacturing Services Construction Retail

All sectors have posted similar rates of output
growth over the last 3 months
Northern Ireland Private Sector Output
30
35
40
45
50
55
60
65
70
Manufacturing Services Construction
Source: Markit Economics &
Ulster Bank NI PMI

…with manufacturing & services firms reporting an
easing in rates of employment growth
NI PMI - Employment Index
25
30
35
40
45
50
55
60
65
Manufacturing Services Construction
JobGainsJobLosses

Manufacturing continues to report a marked
slowdown in output, orders & employment
NI Manufacturing Activity - PMI
25
30
35
40
45
50
55
60
65
Business activity New Orders Employment
GrowthContraction

RoI firms continue to post strong rates of growth in output
while the growth rates have eased markedly in the UK & NI
Manufacturing Output
30
35
40
45
50
55
60
65
UK NI RoI No Change

Slowdown in new orders growth is most marked
amongst NI manufacturing firms
Manufacturing New Orders
25
30
35
40
45
50
55
60
65
UK NI RoI No Change

Until recently, NI had been outperforming most of
its European competitors
Manufacturing Output - PMI
20
30
40
50
60
70
RoI Italy Spain Greece NI France

Input cost inflation picked up in December from a 5½
year low. Output prices fell for a 3rd month in a row
NI Manufacturing Input & Output Inflation
30
40
50
60
70
80
No Change Input Costs Output Prices
InflationDeflation
Profits
squeeze

The PMI is signalling a moderation in manufacturing
employment growth in Q3/Q4 following record high in Q2
NI Manufacturing Employment: PMI v QES**
30
35
40
45
50
55
60
65
2004 Q4 2006 Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
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
expansion / contraction threshold.

Service sector experiences a slowdown in its rates of
growth in output & employment
NI Service Sector (excludes Retail)
30
35
40
45
50
55
60
65
70
Dec-03 Oct-05 Aug-07 Jun-09 Apr-11 Feb-13 Dec-14
Business activity New Orders Employment
GrowthacceleratingContractionaccelerating

RoI firms report strong rates of growth in December. UK & NI
firms have seen their rates of growth ease in recent months
Services Output (excluding Retail)
30
40
50
60
70
UK NI RoI No Change

NI firms report a marked slowdown in the rate of
new orders growth in Q3 & Q4
Services New Orders (excluding Retail )
30
40
50
60
70
UK NI RoI No Change

NI’s services firms saw a pick up in input cost inflation in
December but it remains well below long-term average
NI Services Input & Output Inflation
30
40
50
60
70
80
Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13 Nov-14
No Change Input Costs Output Prices
InflationDeflation
Profits
squeeze

Service sector employment growth slowing in NI,
stabilising in UK and accelerating in the RoI
Services Employment
30
35
40
45
50
55
60
65
UK RoI NI No Change

In Q2 the services PMI showed its fastest rate of jobs
growth since Q4 2007. Pace of job creation eases in Q3/Q4
NI Services Employment: PMI v QES**
40
45
50
55
60
65
2004 Q4 2006 Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4
PMI Index
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
Q/Q
Job losses
Job
gains
**QES is DFP's official Quarterly Employment Survey of the number of
jobs in NI and includes the public sector
Economics, PMI Index 50.0 denotes
threshold between expansion /
contraction.

NI retailers reporting a sharp contraction in sales in
Q3 & Q4 after a bumper Q2 (boosted by Giro D’Italia)
Northern Ireland Retail PMI
3 monthly average
25
35
45
55
65
75
Business Activity New Orders Backlogs No Change

Local retailers report heavy discounting with output
prices recently falling at their fastest rate since mid-2009
NI Retail Input & Output Inflation
30
40
50
60
70
80
90
Input Costs Output Prices No Change
InflationDeflation
Source: Markit Economics & Ulster Bank NI Profits squeeze

Following Q2’s record rates of growth, NI’s construction
firms report an easing in their rates of growth in Q3/Q4
NI Construction PMI
20
30
40
50
60
70
Output New Orders Employment
Source: Markit Economics, Ulster Bank
50 = No change

Input cost inflation remains high but construction
firms are at least still reporting output price inflation
NI Construction Sector Profits Squeeze
20
30
40
50
60
70
Mar-09 Aug-10 Jan-12 Jun-13 Nov-14
PMI Index
Input Prices Output Prices No Change
Source: Markit Economics & Ulster Bank
InflationDeflation

NI’s construction PMI posts jobs growth since Q3 2013
but this is largely due to NI firms working outside of NI
NI Construction Employment: PMI v QES**
20
25
30
35
40
45
50
55
60
65
2004 Q4 2007 Q2 2009 Q4 2012 Q2 2014 Q4
PMI Index
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
Q/Q
Job
losses
Job
gains
**QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms
Economics, PMI Index 50.0 denotes threshold
between expansion / contraction.

Strong rates of output growth amongst UK & RoI firms
with pace of growth easing significantly for NI firms
Construction Sector Output - PMI
20
30
40
50
60
70
PMI Index
NI UK RoI

NI orders growth continues to ease from recent record high
with UK growth slowing too. RoI posts robust rates of growth
Construction Sector New Orders - PMI
20
30
40
50
60
70
PMI Index
NI UK RoI

Opportunities for NI firms. However, slowdown in
civil engineering activity
UK Construction Activity - PMIs
20
30
40
50
60
70
Dec-05 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14
Housing Activity Commercial Activity Civil Engineering Activity

…with an increasing number of opportunities within
the RoI too
Republic of Ireland Construction Activity - PMI
20
30
40
50
60
70
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
50 = No change

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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
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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
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This publication provides only a brief review of the complex issues discussed and recipients should not rely on information contained here
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Slide pack , Ulster Bank Northern Ireland PMI, December 2014

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Slide pack , Ulster Bank Northern Ireland PMI, December 2014