Global economic output expanded for the second month in a row in August. While global manufacturing and services output growth accelerated, the eurozone's growth rate slowed and Japan remained in contraction. The UK and Chinese manufacturing sectors saw strong growth, but the eurozone saw manufacturing growth ease. The UK composite PMI hit a six-year high, while growth rates in Northern Ireland and the Republic of Ireland slowed. Northern Ireland firms reported a notable contraction and remained the most pessimistic UK region about the year ahead.

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
August 2020 Survey Update
Issued 14th September 2020
Richard Ramsey
Chief Economist Northern Ireland
www.ulstereconomix.com
richard.ramsey@ulsterbankcm.com
Twitter @UB_Economics

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. August 2020 Northern Ireland PMI – Key highlights

4. • Global output expands for the 2nd month running (52.4)
• Global manufacturing (53.6) & services output (51.9) both accelerate
• US & Chinese composite PMIs post an acceleration in their rates of
growth while the EZ composite eases & Japan remains in contraction
• Brazil returns to growth while India remains stuck in contraction
• Chinese manufacturing output hits a 9½-year high (56.2)
• Composites for Germany & France report a slowdown in rates of
growth while Spain & Italy return to contraction
• UK composite PMI (58.7) hit a 6-year high with services and
manufacturing activity accelerating
• The UK’s services sector was the top international performer in August
• RoI’s composite PMI slips from 55.8 (July) to 53.8 due to a slowdown in
manufacturing (56.1) & contraction within construction (44.2)
• All 12 UK regions report output growth with four regions exceeding 60
• The North East (66.0) & South East (64.9) saw record highs in output
August 2020 Global PMIs – highlights

5. • All of the headline indicators deteriorate relative to August
• Output growth slows from 54.5 in July to 51.7
• New orders fall sharply (45.1) following July’s rise (1st in 18 mths)
• Pace of job losses quickens (42.3) but less marked than UK (39.0)
• Export orders still falling at a rapid pace (33.7)
• Firms cut prices for the fifth time in six months
• Services output (51.2) rises for the first time since February 2019
• Manufacturing (55.2) maintains robust rate of output growth but
construction (49.0) & retail (48.3) post declines after a strong July
• 5% of manufacturing firms & 16% of service firms increased staff
• 38% of manufacturing firms & 25% of service firms reduced staff
• All sectors bar manufacturing expect output to fall in 12 mths time
• After Wales, NI had the slowest rate of output growth in the UK
• NI firms remain the most pessimistic UK region for the year ahead
August 2020 Northern Ireland PMI – Key highlights

6. Global manufacturing (53.6) and services (51.9) output
growth accelerates in August

7. US & China see rates of growth accelerate while the EZ’s
growth rate slows and Japan remains in contraction

8. Emerging Markets’ (52.9) & Developed Markets’ (52.2)
PMIs post their second successive month of growth

9. Brazil joins Russia (fastest growth since Jul-08) and China
in expansion mode while India continues to contract

10. Chinese manufacturing output growth hits a 9½-year
high (56.2) but services rate of growth (54.0) eases

11. Germany & France post a slowdown in growth while
Italy and Spain return to contraction

12. Composite & services PMI growth rates slow while the
rate of manufacturing output growth quickens

13. The UK & Russia post the fastest rates of growth in services
activity with India & Japan posting the steepest declines

14. EZ manufacturing growth eases while activity in China
& the US accelerates. Japan’s contraction continues

15. Developed Markets’ manufacturing posts growth for the
first time since April 2019 joining Emerging Markets

16. All three economies post growth in August - NI (51.7), UK
(58.7) & RoI (53.8) – but growth rates in NI & RoI slow

17. NI composite economic index falls at a record pace in Q1 but an
even bigger decline is due in Q2 before recovery begins in Q3

18. 2020 has seen business conditions deteriorate at record rates

19. Recovery in output begins in Q3* following Q2’s
record rate of decline

20. Output growth eases, orders return to contraction
and pace of job losses accelerates

21. UK output growth accelerates while the RoI’s rate of
growth eases. NI firms post a notable contraction

22. NI firms report a much steeper rate of contraction in
backlogs than their UK & RoI counterparts

23. NI export orders slump continues

24. Output growth has returned but job losses continue
with the pace of decline accelerating in NI, UK & RoI

25. Private sector employment (as of 2nd March) still
increasing but PMI signals big falls in Q1, Q2 & Q3

26. Input cost inflationary pressures picking up (e.g.
PPE costs) while prices charged are falling

27. Regional
Comparisons

28. All UK regions post output growth in August

29. All regions – bar NI and Scotland – posted growth
over the last 3 months…

30. NI posts the fastest rate of output growth decline over
the last 12 months

31. NI remains the least optimistic / most pessimistic
about the future than any other UK region

32. All 12 regions posted significant job losses in August

33. NI firms’ job losses less marked than most other regions

34. All regions post job losses over the last 12 months

35. Sectoral
Comparisons

36. UK services and manufacturing output growth
accelerates while construction’s rate of expansion eases

37. Manufacturing’s ‘V-shaped’ recovery continues,
lacklustre services’ growth & construction output falls

38. NI’s private sector ends the decade the way it
began… with all sectors in contraction mode

39. All sectors bar services post growth during Q3*

40. Construction joins (only just) manufacturing in expansion
mode for the last 3 months. Services still contracting

41. Rate of job losses remains sharp (3mmov.ave) across
all sectors

42. Input cost inflationary pressures accelerating for all
sectors particularly retail

43. Pricing power remains weak with discounting amongst
manufacturers and services firms

44. NI manufacturers reporting a pick-up in demand but
pace of employment cuts remains significant

45. Strong growth in manufacturing output is evident
across all economies

46. NI manufacturing output recovery continues

47. NI manufacturing continues to lag behind its UK & RoI
peers in terms of new orders growth

48. RoI and NI manufacturers record faster rates of
output growth relative to their European peers

49. NI manufacturers report an easing in input cost inflation
while the UK & Global input costs accelerate

50. Manufacturing firms’ pricing power slumps squeezing
profitability further as cost pressures intensify

51. NI, UK & RoI manufacturers are still shedding staff at
significant rates

52. NI services contraction evident across employment,
orders and output (3 month average)

53. NI & RoI service sectors continue to lag behind the UK
in terms of output growth

54. NI’s services sector in contraction mode on a 3 month
moving average (though returns to growth in August)

55. Service sector order books filling up in the UK but RoI
and NI are lagging behind

56. Service sector experiencing a divergence in input costs
(rising) and output prices (falling)

57. All economies posting sharp rates of decline in
services employment in the three months to August

58. Retail sales and order rebounded strongly in July but
sales fall in August. Job losses continue at a rapid rate

59. Retailers experiencing a profit squeeze

60. NI’s construction activity picking up but staffing levels
continue to be cut at a rapid rate

61. Construction firms’ pricing power remains very weak
in the face of rising input costs

62. RoI construction activity lagging behind NI and the UK

63. UK, RoI and NI construction sectors are still waiting for
a meaningful pick-up in new orders

64. NI construction firms remain the least optimistic

65. House building is leading the construction recovery

66. Construction sector’s availability of sub-contractors
continues to rise with rates posting modest rises too

67. Optimism amongst UK construction firms slumped in April
matching October 2008’s record low on the rise since

68. All aspects of RoI construction activity contracts in
August

69. Lifting lockdown restrictions sees a modest rise in the
availability of sub-contractors but dips again in August

70. RoI construction firms’ optimism remains well below average

71. Slide 71
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