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Ulster Bank Northern Ireland PMI February 2013
 

Ulster Bank Northern Ireland PMI February 2013

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Slide pack re the Ulster Bank Northern Ireland Purchasing Managers Index February 2013 (published 11th March, 2013)

Slide pack re the Ulster Bank Northern Ireland Purchasing Managers Index February 2013 (published 11th March, 2013)

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    Ulster Bank Northern Ireland PMI February 2013 Ulster Bank Northern Ireland PMI February 2013 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 February 2013 Survey Update  Issued 11th March 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
    • 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.
    • Global output growth eases in February due largely tomanufacturing sector Global Output - PMI 65 Source: Markit Economics 60 Expansion 55 50 45 Contraction 40 35 30 Total Manufacturing Services 25 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • All sectors within the Eurozone are still contracting Eurozone PMIs: Output 65 Source: Markit Economics Output Indices Expansion 60 55 50 Contraction 45 40 35 30 Composite (M&S) Manufacturing Services Construction 25 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Greece, France & Italy post steepest falls inmanufacturing output. Denmark posts strongest gain PMIs: Manufacturing Output February 2013 Denmark N.Zealand* US Switzerland India Mexico Brazil Turkey Russia NI South Africa Global NI, RoI & UK Canada Ireland China Germany Taiwan Netherlands Indonesia Czech S.Korea UK Vietnam Poland Austria Singapore EU Japan EZ Spain Australia Israel** Source: Markit Economics Output Indices, * Italy January, **December France Greece 35 40 45 50 55 60 65
    • Services output expanding for BRICs, US, Germany, Japan,UK & Ireland. France & Italy posting the steepest declines PMIs: Services Output February 2013 US* Russia Germany India Ireland Global Emerging Markets Brazil China UK Japan EU Australia EZ € NI Spain Source: Markit Economics Output Indices, * France US Non-manufacturing which is wider than Italy services 40 45 50 55 60
    • The 2nd, 3rd & 4th largest economies within the eurozoneare contracting at a rapid rate Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics PMIs 30 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • US remains the best performer relative to China, UK & EZ Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 Eurozone US (ISM) China UK 60 Expansion 55 50 Contraction 45 40 Source: Markit Economics 35 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • … and US manufacturing is expanding at a faster ratethan China Manufacturing PMIs65 US (ISM) China Japan Eurozone60 Expansion5550 Contraction45403530 Source: Markit Economics25 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • UK & RoI see their rates of growth ease in February whilstthe rate of contraction eases for Northern Ireland Private Sector Business Activity - PMIs **PMI Surveys Exclude Agriculture & Public Sector** 65 NI UK RoI 60 Expansion 55 50 45 Contraction 40 35 Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • PMI suggests further private sector composite index (combines DFPindices for construction, services & industrial production) in Q1 2013 to be flat NI Private Sector Output Index Versus NI PMIPSO Q/Q% PMI UB PSO Left Hand Scale UB PMI Right Hand Scale 5 65 50 mark is the threshold for expansion / contraction with PMI 4 60 3 Expansion 2 55 1 50 0 45 -1 -2 40 -3 Contraction 35 -4 Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics, * Jan&Feb average -5 30 2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1*
    • NI output, new orders and employment all see theirpace of contraction ease over the last 3 months NI Private Sector Activity 3 month moving average 70 Business Activity New Business Employment 65 Expansion 60 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • Pace of contraction in NI new orders eases Private Sector New Orders 3 month moving average 65 Orders increasing NI UK RoI 60 55 50 45 Orders Contracting 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-03 Oct-04 Jun-06 Feb-08 Oct-09 Jun-11 Feb-13
    • NI’s levels of work outstanding still falling at a rapid ratebut the pace of decline is easing Private Sector Backlogs 3 month moving average 60 NI UK RoI Increasing 55 50 45 Decreasing 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-03 Oct-04 Jun-06 Feb-08 Oct-09 Jun-11 Feb-13
    • Export orders post its best February reading in 6 years NI New Export Business Monthly Growth Accelerating 65 New Export Orders No Change 60 55 50 45 Contraction Accelerating 40 35 30 25 Source: Markit Economics & Ulster Bank NI PMI 20 Feb-03 Feb-05 Feb-07 Feb-09 Feb-11 Feb-13
    • PMI underestimated job gains in Q2 & Q3 (relative to official jobssurvey) further job losses signalled in Q4 2012 but flat in Jan/Feb-13 PMI Index NI Employment: PMI v QES* Q/Q 60 1.0% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI & includes the public sector 0.8% 55 Job 0.5% gains 0.3% Discontinuity in QES Series 50 0.0% -0.3% 45 -0.5% Job losses -0.8% 40 Source: DFP, Ulster Bank & Markit Economics, PMI -1.0% Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages except February 2013 -1.3% which is based on average of January & February 35 -1.5% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Feb-13 PMI Employment Index No Change QES Q/Q
    • The UK, RoI and NI all see a fall in their employmentindices with NI posting a marginal decline in staffing levels Private Sector Employment Levels Monthly 60 NI UK RoI Job Gains 55 50 Job Losses 45 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Input cost inflation eases in February (but up over last 3months) with output prices and charges still falling NI Private Sector Profit Squeeze 3 Month Moving Average 80 Output Prices Input Prices No Change Profits 70 squeeze Inflation 60 50 Deflation 40 Price of goods & Source: Markit Economics & Ulster Bank NI PMI services falling 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • RegionalComparisons
    • 3 UK regions post a contraction in February with NIposting the steepest decline followed by the North East… Output / Business Activity February 2013 PMI index Expansion 55 50 = No change 51.9 50.8 50 Contraction 48.4 45 40 Source: Markit Economics & Ulster Bank NI PMI 35 Wal Scot NW East SE EM Y&H Lon UK WM SW NE NI RoI
    • NI posts sharpest rate of decline over the last 3 months… Output / Business Activity 3 months to February 2013 PMI Index 50 = No change 56 Expansion 54 52.9 52 50.7 50 Contraction 48 47.2 46 44 42 Source: Markit Economics & Ulster Bank NI PMI 40 Wal Y&H Scot East Lon SE EM WM UK NW SW NE NI RoI
    • ……and over the last 12 months Output / Business Activity PMI index 12 months to February 2013 50 = No change 55 Expansion 51.4 51.6 50 Contraction 45 44 Source: Markit Economics & Ulster Bank NI PMI 40 Lon WM Y&H EM Wal Scot SE UK East NW SW NE NI RoI
    • Two English regions & NI report falling employmentlevels in February … Employment Levels February 2013 PMI Index 54 50 = No change Increasing 52.1 52 50.9 50 Decreasing 49.0 48 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 SE East WM Lon EM Wal UK Scot NW NE SW NI Y&H RoI
    • …and 4 UK regions (incl. NI) post declines over last 3months… Employment Levels PMI Index Last 3 months to February 2013 54 50 = No change Increasing 52.5 52 50.6 50 Decreasing 49.3 48 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 SE EM East WM Y&H Wal Scot UK Lon NE NW SW NI RoI
    • NI posts the steepest decline in employment over thelast 12 months Employment Levels 12 months to February 2013 PMI Index 50 = No change 54 Increasing 52 51.2 50.5 50 Decreasing 48 47.6 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 EM WM SE East Scot Y&H UK SW Wal Lon NW NE NI RoI
    • SectoralComparisons
    • UK service sector growth accelerates in February, butmanufacturing and construction post contractions UK Business Activity / Output - PMIs 70 Services Manufacturing Construction Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • UK composite PMI suggests Q1 2013 GDP growth willbe marginal at best UK GDP versus UK Composite PMI PMI Index GDP Q/Q 65 1.5 60 1 55 0.5 50 0 45 -0.5 40 -1 35 -1.5 30 -2 Source: ONS & Markit Economics, * refers to January & February 25 -2.5 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1* GDP Q/Q PMI PMI No Change
    • Services & manufacturing remain above 50 in the RoI RoI Business Activity - PMIs 3 month moving average 65 Manufacturing Services Construction No Change Expansion 60 55 50 Contraction 45 40 35 30 25 Source: Markit Economics 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • All sectors in NI contracting (3 month average)…. NI Private Sector Output 3 month moving average65 Manufacturing Services Construction60 Expansion5550 Contraction454035 Source: Markit Economics & Ulster Bank NI30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • … with services and construction sectors still reportingfalling employment levels NI PMI - Employment Index 3 month moving average 65 Manufacturing Services Construction Job Gains 60 55 50 45 Job Losses 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Manufacturing posts employment and new ordersgrowth over the last three months NI Manufacturing Activity 3 month moving average 65 Growth accelerating Business activity New Orders Employment 60 55 50 Contraction accelerating 45 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • UK manufacturing output growth eases in the 3months to February Manufacturing Output 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • NI posts the strongest growth in new orders Manufacturing New Orders 3 month moving average 65 UK NI RoI No Change Expansion 60 55 50 45 Contraction 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • N.Ireland manufacturing catching-up with economieselsewhere Manufacturing Output - PMI 3 month moving average 70 Source: Markit Economics PMIs Expansion 60 50 Contraction 40 30 China Germany US NI UK 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Ireland is still outperforming its Eurozone partners & NI Manufacturing Output - PMI 70 RoI Italy Spain Greece NI Expansion 60 50 40 Contraction 30 Source: Markit Economics PMIs, NI is 3 month moving average 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Cost price inflation easing for local manufacturing firmsand output prices are rising (return of pricing power) 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 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • PMI signals no major job losses in Q4 & growth in Q1 (Feb-13) but FG Wilson announcement still to take effect PMI Index NI Manufacturing Employment: PMI v QES* Q/Q 65 4% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI firms 3% 60 Discontinuity in QES Series Job gains 2% 55 1% 50 0% 45 -1% Job losses -2% 40 Source: DFP, Ulster Bank & Markit PMI Index 50 -3% denotes threshold between expansion / 35 contraction,PMI 3mth averages except Jan-13 -4% (monthly) 30 -5% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Feb-13 PMI Employment Index No Change QES Q/Q
    • RoI & UK growth continues while NI still posts declinesin output 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 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • New orders growth slowing in the RoI and remainssubdued in the UK. Meanwhile NI still contracting 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 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • …with employment levels still falling in NI over thelast three months (but growth returned in January) Services Employment 3 month moving average 65 UK RoI NI No Change Expansion 60 55 50 45 Contraction 40 35 Source: Markit Economics & Ulster Bank NI PMI 30 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • The PMI signals modest employment declines for theservice sector in Q4. But PMI includes private sector only PMI Index NI Services Employment: PMI v QES* Q/Q 65 1.5% *QES is DFPs official Quarterly Employment Survey of the number of jobs in NI and includes the public sector 60 1.0% Discontinuity in QES Series 55 Job 0.5% gains 50 0.0% 45 Source: DFP, Ulster Bank & Markit Economics, PMI -0.5% Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages except February 2013 which is based on average of January & February Job losses 40 -1.0% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Feb-13 PMI Employment Index No Change QES Q/Q
    • Local retailers still reporting falling orders & activitybut pace of decline has eased 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 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • Profits squeeze on local retailers remains NI Retail Input & Output Inflation 3 month moving average 90 Input Costs Output Prices No Change Profits 80 squeeze Inflation 70 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI 30 Feb-04 Aug-05 Feb-07 Aug-08 Feb-10 Aug-11 Feb-13
    • NI construction sector still in the midst of a severe downturn 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 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13
    • …with profits squeeze continuing NI Construction Sector Profits Squeeze 3 month moving averagePMI Index Input Prices Output Prices No Change 70 Inflation 60 50 Deflation 40 30 Source: Markit Economics & Ulster Bank PMI 20 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13
    • NI PMI has been a reasonably good predictor of actualjob losses in the official employment surveys (QES) PMI Index NI Construction Employment: PMI v QES Q/Q 65 5.0% *QES is NIs official Quarterly Employment Survey of the no. of jobs in NI firms 60 Job 2.5% 55 gains Discontinuity in QES Series 50 0.0% 45 -2.5% 40 35 -5.0% 30 Source: DFP, Ulster Bank & Markit PMI Index 50 -7.5% Job losses denotes threshold between expansion / contraction,PMI 25 3mth averages except Feb-13 (average of Jan & Feb) 20 -10.0% Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Feb-13 PMI Employment Index No Change QES Q/Q
    • UK, RoI & NI all post contractions in construction output Construction Sector Output - PMI 3 month moving average PMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13
    • … and with new orders falling in NI, UK & RoI Construction Sector New Orders - PMI 3 month moving averagePMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13
    • Growth opportunities for NI firms within GB will waneas activity eases UK Construction Activity - PMIs 3 month moving average 70 Housing Activity Commercial Activity Civil Engineering Activity Expansion 60 50 40 Contraction 30 Source: Markit Economics 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • Lack of opportunities in the RoI with all constructionsub-sectors declining in February Republic of Ireland Construction Activity - PMI 3 month moving average 70 Housing Activity Commercial Activity Engineering Activity Expansion 60 50 = No change 50 40 Contraction 30 Source: Markit Economics & Ulster Bank 20 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13
    • DisclaimerThis 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. Slide 52