Slidepack for the Ulster Bank Northern Ireland PMI, June 2016, including analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

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
June 2016 Survey Update
Issued 11th
July 2016
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. Global output growth remains subdued in June with
manufacturing activity rising from May’s 42-month low

4. China, Japan and the UK report a deterioration in their
composite PMIs in June

5. Developed Markets’ PMI stuck in low growth mode
while Emerging Markets stagnates

6. Emerging Markets’ PMI continues to stagnate with Brazil
in recession. Russian PMI hits a 40-month high

7. Chinese manufacturing & services PMIs diverge

8. Services & manufacturing in low growth mode
‘Down Under’

9. Spain & Italy report an acceleration in business
activity with France back in contraction territory

10. EZ manufacturing output growth quickens in June but
services growth slows with retail & construction in decline

11. GDP picked up in Q1-16 but composite PMI signals that
the Eurozone economy is stuck in a low gear in Q2

12. The RoI continues to post the fastest rate of output
growth in services with Brazil contracting at a rapid rate

13. Manufacturing PMIs for the EZ and the US (ISM) improve
in June while Japan & China in contraction mode

14. Developed Markets still outperform Emerging Markets.
The latter is below 50 for 14th
time in 15 months

15. New Zealand**, Denmark & Austria record the fastest
rates of manufacturing growth. BRICS still struggling

16. UK firms report weakest rate of growth since Mar-13 with
NI faring slightly better & RoI in robust growth mode

17. PMI suggests private sector growth stabilises in Q4-15,
accelerates in Q1 2016 but eases in Q2

18. 2014 was the 1st
year in 7 years that the 4 main indicators
recorded expansion, repeated in 2015 but growth slowed

19. Output, orders & jobs growth eases in Q2 relative to Q1
with only exports growth increasing albeit marginally

20. NI firms reported an improvement in business conditions
in June albeit from subdued levels for output & orders

21. RoI firms are still reporting strong growth in new orders
while NI & UK firms post a marked slowdown in Q2

22. RoI firms still reporting rising backlogs while their
UK & NI counterparts post declines

23. NI export orders fall for the first time in five months

24. RoI jobs growth slows but still robust rate while UK hiring
slowdown continues with NI posting a pick-up in June

25. Input cost inflation accelerating at a faster rate
than output prices with implications for
profitability

26. Regional
Comparisons

27. The North West tops the regional growth table with
London recording its weakest reading since April 2009

28. The East Midlands reported the strongest rates of growth
in Q2 with London, Scotland & the North East the weakest

29. The RoI reported the fastest growth rate in business
activity over the last year with Scotland the slowest

30. Northern Ireland recorded the strongest rate of job
creation within the UK in June

31. Yorkshire & Humberside, Scotland & the North East report
job losses in Q2 with NI outperforming most of its peers

32. Scotland & the North East post job losses over the last
year with NI below the UK average

33. Sectoral
Comparisons

34. Manufacturing output growth rebounds as services
slows and construction signals a marked contraction

35. The UK’s growth rate slowed in Q1 to 0.4% and is
expected to slow further in Q2 based on PMI

36. Services was the only sector in the RoI to report a slowdown
in activity in June with a pick-up in activity elsewhere

37. NI manufacturing was the only sector to report faster
rates of growth in Q2 relative to Q1

38. Services sector output growth slowing fast with
construction contracting & manufacturing improving

39. Rate of jobs growth eases within services & construction
while recent phase of manufacturing job losses has passed

40. NI’s manufacturing firms report a reversal of fortunes
following a period of contraction

41. NI manufacturing output returns to low-growth
mode alongside the UK

42. NI manufacturing output emerges from contraction but
remains well below its pre-downturn long-term average

43. NI & UK firms report a sharp pick-up in new orders
growth with RoI reporting a marked slowdown

44. Manufacturing output contracts for France with
growth accelerating elsewhere

45. Higher wage costs (NLW introduced) & import costs
push input cost inflation to a 23-month high

46. Slowdown in global manufacturing has been hitting
employment most notably within the UK & NI

47. NI services sector experiences a slowdown across all
key indicators in Q2

48. NI’s services sector reports a notable slowdown in
output growth but still outperforms the UK

49. The rate of growth in NI’s services sector falls back
below its pre-downturn long-term average in Q2

50. NI firms report an easing in new orders growth after
recent high as growth slows markedly amongst UK firms

51. Input cost inflation picks up with output price rises
continuing albeit at a notably weaker rate

52. NI & UK firms report an easing in the rate of service sector
jobs growth with RoI’s growth rate broadly maintained

53. NI retailers are still reporting strong rates of jobs growth
but sharp slowdown in sales growth and orders falling

54. Input cost inflation for NI retailers hits a 33 month high
with output prices rising for the first time in 10 months

55. NI’s construction firms in contraction mode with
employment growth broadly flat

56. Input cost inflation remains steady with pricing
power being eroded

57. Output growth for RoI firms eases with a more significant
slowdown for UK firms & contraction amongst NI firms

58. NI firms post a marked contraction in new orders with a
rapid slowdown within UK & continued growth within RoI

59. UK firms report a sharp fall in housing & commercial
activity in June with civil engineering broadly flat

60. UK sub-contractors remain in short-supply with rates
charged still rising albeit at slower rates than in 2015

61. Optimism amongst UK construction firms has been
falling lately and is below its long-term average

62. All aspects of RoI construction activity have reported
a marked acceleration in their growth rates

63. RoI’s construction industry still reporting a decrease in
the availability of sub-contractors & rising rates of pay

64. RoI construction firms still remain very optimistic about
the year ahead and well above the long-term average

65. Slide 65
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