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Ulster Bank Northern Ireland PMI - April 2018 Slidepack

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Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector. April 2017 Survey Update. Richard Ramsey Chief Economist Northern Ireland. Issued 14th May 2018.

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.

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Ulster Bank Northern Ireland PMI - April 2018 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 April 2017 Survey Update Issued 14th May 2018 Richard Ramsey Chief Economist Northern Ireland www.ulstereconomix.com 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 growth quickens from its16-mth low of 53.3 to 53.8 • Growth accelerates in China, Japan, the US & the UK • US PMI growth rate quickens from 54.2 to 54.9 • China composite PMI eases from 51.8 – a 4-mth low – to 52.8 • Emerging Markets PMI rises to 52.4 due to Russia, India & China • Developed Markets PMI rebounds off 18-mth low of 53.6 to 54.4 • Rebound from ‘Beast from the East’ across Europe underwhelming • EZ composite PMI slips slightly from 55.2 to 55.1 – a 15-mth low • Germany composite slips to an 19-mth low of 54.6, France picks- up from 7-mth low of 56.3 to 56.9, Spain hits a 4-mth low of 55.4 • Italian composite PMI slips from 53.5 to 52.9 – 15-mth low • RoI composite rebounds strongly from 57-mth low of 53.8 to 56.7 • UK composite PMI quickens from 20-mth low of 51.9 to 53.2 • Yorkshire & Humber (55.0) & the West Midlands (54.8) post the fastest rates of output growth in April. North East lags with 50.4 April 2018 Global PMIs – Key highlights
  4. 4. • Business growth quickens marginally from March’s 8-mth low of 53.2. At 53.5, still below pre-downturn long-term average of 55.1 • NI firms’ optimism for the year ahead soars to 14-mth high • 39th successive month of private sector jobs growth (52.5) • Growth in new order books remains very subdued at 51.4 • All sectors bar services saw slower rates of output growth • Manufacturing output growth eased to a 5-mth low of 53.0 • Manufacturing orders accelerate from 14-mth low (52.3) to 54.0 • Service sector activity quickens from 17-mth low of 51.4 to 53.9 but remains weak & well below pre-recession average (57.7) • Export orders growth remains robust at 55.0 • Retailers report first fall in orders for 21 months • All sectors notably retail saw inflationary pressures intensify • Construction activity close to stagnation (50.4) & orders fall (47.7) April 2018 Northern Ireland PMI – Key highlights
  5. 5. Global output growth rebounds off March’s 16-mth low
  6. 6. Growth moderates in the Eurozone (15-mth low) with growth rebounding elsewhere
  7. 7. Developed Markets PMI rebounds off March’s 18-mth low
  8. 8. Emerging Markets’ growth rate improves marginally due to Russia, India & China but growth slows in Brazil
  9. 9. Chinese PMIs report a pick-up in services activity & a marginal improvement in manufacturing output
  10. 10. Republic of Ireland posts the strongest rebound in April
  11. 11. Eurozone sees an acceleration in manufacturing & construction output growth while services & retail ease
  12. 12. Eurozone PMI suggested a stronger quarter of EZ economic growth than first GDP Q1 estimate suggests
  13. 13. The Republic of Ireland, France & Spain post the fastest rates of services growth in April. NI / UK still lagging
  14. 14. EZ & US manufacturing activity continues to ease with growth rates in Japan & China quickening
  15. 15. Developed & Emerging Markets’ PMIs continue to diverge
  16. 16. ‘Beast from the East’ contributed to March slowdown but rebound in April underwhelming for NI & UK
  17. 17. PMI more positive than Composite Index. Latter includes hefty falls in manufacturing output due to closure of JTI plant.
  18. 18. Output, orders & employment growth hit a 3-yr high in 2017. Exports in line with 2016’s 12-yr high
  19. 19. Export orders the only indicator not to post a slowdown in its growth rate in Q2*
  20. 20. NI firms report a modest improvement in the pace of expansion in activity & orders but job creation eases
  21. 21. UK & NI new orders growth accelerates marginally from subdued levels
  22. 22. UK, NI & RoI firms continue to report rising backlogs of work though the rate of growth in NI firms is slowing fast
  23. 23. NI firms continue to post strong rates of growth in export orders
  24. 24. NI’s rate of employment growth eases in April but compares favourably with the UK’s 15-month low
  25. 25. NI’s firms in hiring mode in H2 2017 with PMI signalling an acceleration in jobs growth in Q4 but easing in Q1- 18
  26. 26. Squeeze on profit margins continues
  27. 27. Regional Comparisons
  28. 28. Yorkshire & Humber and West Midlands top the regional growth table with Scotland & the North East at the bottom
  29. 29. East Midlands & North West top the growth table for last 3 months with Scotland & the North East at the bottom
  30. 30. The East Midlands & the North West record the fastest rates of growth over the last year
  31. 31. NI’s pace of job creation remains above the UK average but is below three other regions
  32. 32. NI’s employment growth rate outperforming six UK regions over the last 3 months
  33. 33. Scotland & the North East have reported the weakest rates of jobs growth over the last year. NI in line with UK
  34. 34. Sectoral Comparisons
  35. 35. UK construction & services output rebounds following weather disruption but recovery weaker than expected
  36. 36. PMI suggests a loss of momentum in Q1 2018 but how much was weather related?
  37. 37. All sectors of the RoI economy, notably manufacturing, report a marked rebound in growth in April
  38. 38. Slowdown evident across all sectors in Q2*
  39. 39. All sectors remain in expansion mode but growth rate is slowing
  40. 40. Pace of hiring eases across sectors with manufacturing dipping into contraction territory
  41. 41. Inflationary pressures remain intense across all sectors, particularly retail
  42. 42. NI’s manufacturing firms reporting slower rates of growth in output, employment (falling) & new orders
  43. 43. Manufacturing output growth slows notably amongst RoI firms & to a lesser degree amongst NI & UK firms
  44. 44. NI manufacturing output growth (last 3 months) still remains above its pre-downturn long-term average
  45. 45. UK, NI & RoI manufacturing firms all report a marked easing in new orders growth
  46. 46. Greece, Italy & NI report an easing in manufacturing output growth. RoI posts a strong rebound recent low
  47. 47. UK cost pressures ease to a 9-mth low but NI inflationary pressures picking up again
  48. 48. Input cost inflationary pressures ease slightly
  49. 49. Employment growth stalls for NI manufacturing firms while the pace of job creation eases for RoI & UK firms
  50. 50. NI’s services sector reports a slowdown in growth rates (3-month moving average) of key indicators
  51. 51. NI firms report a marked slowing in output growth over the last 3-months with NI & UK lagging behind RoI
  52. 52. NI’s services sector (3-month average) falls further below its pre-downturn long-term average growth rate
  53. 53. New orders growth eases for NI service sector firms but still remains above the UK’s growth rate
  54. 54. Input cost inflation accelerates putting a squeeze on service sector profit margins
  55. 55. Pace of hiring remains broadly unchanged in April with NI/UK firms lagging behind their RoI counterparts
  56. 56. Retail sales growth slowing, orders contracting but pace of job creation accelerates
  57. 57. NI retailers report steep inflationary cost pressures which continue to squeeze profit margins
  58. 58. NI’s construction firms report a marked easing in output & new orders growth but jobs growth holding up for now
  59. 59. Inflationary pressures remain intense amongst NI construction firms
  60. 60. RoI firms report continued robust rates of growth while NI & UK firms post a notable slowdown
  61. 61. UK & NI firms report a contraction in new orders growth while RoI firms report robust rates of order book expansion
  62. 62. UK housebuilding rebounds from March low with housing & civil engineering hitting 11-mth & 9-mth highs
  63. 63. Construction sector still reporting a shortage of sub-contractors with rates charged rising
  64. 64. Optimism amongst UK construction firms rising & approaching its long-run average
  65. 65. Pick-up in RoI commercial & housing activity as engineering activity slows
  66. 66. RoI’s construction firms still reporting a decline in the availability of sub-contractors & rising rates of pay
  67. 67. RoI construction firms very optimistic about the next 12 months & still well above the long-term average
  68. 68. Slide 68 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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