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Northern Ireland PMI slide pack, December 2012

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Slide pack for the Ulster Bank Northern Ireland PMI, December 2012, including charts providing comparison with global PMIs, including the Eurozone, UK, and RoI

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Northern Ireland PMI slide pack, December 2012

  1. 1. Ulster Bank Northern IrelandPurchasing Managers Index (PMI) December 2012 Survey Update Issued 14th January 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
  2. 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. 3. Global output records its highest reading in 9 months withmanufacturing posting its 2nd successive month of growth Global Output - PMI 65 Source: Markit Economics Expansion 60 55 50 45 Contraction 40 35 30 Total Manufacturing Services 25 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  4. 4. 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 Whole Economy Manufacturing Services Construction 25 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12 Dec-12
  5. 5. Greece, Australia & Spain post steepest falls inmanufacturing output. Mexico & India post strongest gains PMIs: Manufacturing Output December 2012 Mexico India US Turkey UK Denmark Brazil Indonesia China Ireland Russia Global Switzerland Taiwan Vietnam NI, RoI & UK Netherlands S.Korea Canada Israel N.Zealand Austria Poland EU Germany Singapore EZ Italy NI South Africa Japan Czech Republic France Spain Source: Markit Economics Output Indices Australia Greece 35 40 45 50 55 60 65
  6. 6. Services output expanding for BRICs, US, Germany, Japan &Ireland. EZ, UK, NI & Australia all posting contractions PMIs: Services Output December 2012 Brazil US* Russia Ireland India Global Emerging Markets Germany Japan China UK EU EZ € Italy France Spain Source: Markit Economics Output Indices, * US Non- Australia manufacturing which is wider than services NI 35 40 45 50 55 60 65 70 75
  7. 7. Republic of Ireland & the UK still outperforming theirEuropean competitors in December Composite PMIs (Manufacturing & Services ** Excludes Construction**) 65 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics PMIs 30 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  8. 8. 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 Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
  9. 9. … but Chinese manufacturing is expanding at a fasterrate than the US Manufacturing PMIs 65 US (ISM) China Japan Eurozone 60 Expansion 55 50 Contraction 45 40 35 30 Source: Markit Economics 25 Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
  10. 10. UK just below expansion threshold whilst the rate ofcontraction remains steep 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  11. 11. PMI suggests further falls in private sector composite index (combinesDFP indices for construction, services and industrial production) in Q3 & Q4 2012 NI Private Sector Output Index Versus NI PMI PSO 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 2008 = 100) up to Q2 2012 & Markit Economics -5 30 2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4
  12. 12. NI output, new orders and employment all contractingover 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  13. 13. Pace of contraction in NI new orders remains steepwith UK flat 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  14. 14. NI’s levels of work outstanding still falling at a rapid rate 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  15. 15. Export orders have been falling since February 2008 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  16. 16. PMI underestimated job gains in Q2 & Q3 (relative to official QuarterlyEmployment Survey – QES) further job losses signalled in Q4 2012 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 -1.0% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / -1.3% contraction,PMI 3mth averages 35 -1.5% Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 PMI Employment Index No Change QES Q/Q
  17. 17. Northern Ireland’s rate of decline in employment levelseases sharply in December while the RoI posts jobs growth 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  18. 18. Input cost inflation remains a problem with outputprices 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  19. 19. RegionalComparisons
  20. 20. 4 UK regions post a contraction in December withNorthern Ireland posting the steepest decline… Output / Business Activity PMI index December 2012 55 50 = No change 52.9 Expansion 50 49.9 45 44.8 Contraction 40 Source: Markit Economics & Ulster Bank NI PMI 35 Y&H Wal WM Scot East SW Lon NE UK SE EM NW NI RoI
  21. 21. NI posts sharpest rate of decline over the last 3 months… Output / Business Activity 3 months to December 2012 PMI Index 50 = No change 54 53.6 Expansion 52 50 49.9 Contraction 48 46 44 42 42.3 Source: Markit Economics & Ulster Bank NI PMI 40 Wal Y&H Scot SE Lon NW East WM NE UK EM SW NI RoI
  22. 22. ……and over the last 12 months Output / Business ActivityPMI index 2012 50 = No change55 Expansion 51.9 51.150 Contraction45 43.6 Source: Markit Economics & Ulster Bank NI PMI40 WM Lon Y&H EM SE UK East NW Scot Wal SW NE NI RoI
  23. 23. After the North West, Northern Ireland posts thesteepest decline in employment over the last month … Employment Levels December 2012 PMI Index 54 50 = No change Increasing 52.2 52 50 Decreasing 49.8 48 47.9 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 EM Y&H SE Wal Scot East UK SW WM Lon NE NI NW RoI
  24. 24. …and steepest decline over the last 3 months… Employment Levels PMI index Last 3 months to December 2012 54 50 = No change Increasing 52.2 52 50 Decreasing 49.4 48 46.8 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 EM Y&H SE Scot WM East SW Wal UK NE Lon NW NI RoI
  25. 25. …and over the last 12 months Employment Levels PMI index 2012 54 50 = No change Increasing 52 50.5 50.3 50 Decreasing 48 47 46 44 Source: Markit Economics & Ulster Bank NI PMI 42 EM WM Y&H SE Scot East UK SW Wal Lon NE NW NI RoI
  26. 26. SectoralComparisons
  27. 27. UK manufacturing output shoots above the 50 expansionthreshold but services & construction fall below it UK Business Activity / Output - PMIs 70 Services Manufacturing Construction Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  28. 28. UK composite PMI raises the prospect of negative GDPQ4 reading 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 25 -2.5 2007 Q3 2008 Q2 2009 Q1 2009 Q4 2010 Q3 2011 Q2 2012 Q1 2012 Q4 GDP Q/Q PMI PMI No Change
  29. 29. Services & manufacturing are 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 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  30. 30. All sectors in NI contracting…. NI Private Sector Output 3 month moving average 65 Manufacturing Services Construction 60 Expansion 55 50 Contraction 45 40 35 Source: Markit Economics & Ulster Bank NI 30 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  31. 31. … 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  32. 32. Manufacturing posts employment and new ordersgrowth in Q4 2012 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  33. 33. NI & UK manufacturing performance is divergingwhilst the RoI continues to outperform 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 Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
  34. 34. All 3 economies post growth in new orders for thefirst time since April 2011 Manufacturing New Orders 3 month moving average65 UK NI RoI No Change Expansion60555045 Contraction403530 Source: Markit Economics & Ulster Bank NI PMI25 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  35. 35. N.Ireland manufacturing lagging economies elsewhere Manufacturing Output - PMI 3 month moving average 70 Source: Markit Economics PMIs Expansion 60 50 Contraction 40 30 China Germany US NI UK 20 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  36. 36. Ireland outperforming its Eurozone partners & NI Manufacturing Output - PMI70 RoI Italy Spain Greece NI Expansion605040 Contraction30 Source: Markit Economics PMIs, NI is 3 month moving average20 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  37. 37. Cost price inflation accelerating for local manufacturingfirms & pricing power still falling = profits squeeze 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 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  38. 38. PMI signals no major manufacturing job losses in Q3 andQ4 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 -3% 35 Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / -4% contraction,PMI 3mth averages 30 -5% Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 PMI Employment Index No Change QES Q/Q
  39. 39. RoI growth continues while NI & UK post contractionsin service sector 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  40. 40. New orders growth slowing in the UK and continuesto contract at a rapid rate in NI 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  41. 41. …with employment levels still falling in NI & UK 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  42. 42. 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 0.5% Job gains 50 0.0% 45 -0.5% Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages Job losses 40 -1.0% Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 PMI Employment Index No Change QES Q/Q
  43. 43. Local retailers still reporting falling orders & activity Northern Ireland Retail PMI 3 monthly average 70 Business Activity New Orders Backlogs No Change 65 Expansion 60 55 50 Contraction 45 40 35 30 Source: Markit Economics & Ulster Bank NI PMI 25 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  44. 44. Profits squeeze on local retailers intensifies 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 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  45. 45. 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 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
  46. 46. …….with profits squeeze continuing 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 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
  47. 47. 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 Economics, PMI Job losses -7.5% 25 Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages 20 -10.0% Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12 PMI Employment Index No Change QES Q/Q
  48. 48. UK, RoI & NI all recording contractions in output Construction Sector Output - PMI 3 month moving average PMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
  49. 49. … and with new orders falling in NI, UK & RoI Construction Sector New Orders - PMI 3 month moving average PMI Index NI UK RoI Expansion 60 50 Contraction 40 30 Source: Markit Economics 20 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
  50. 50. Growth opportunities for NI firms within GB will waneas activity eases but pick-up in civil engineering sector 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 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
  51. 51. Lack of opportunities in the RoI with all constructionsub-sectors declining in December 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 Apr-07 Sep-08 Feb-10 Jul-11 Dec-12
  52. 52. 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

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