Slidepack for the Ulster Bank Northern Ireland PMI, August 2016 including analysis of global, Eurozone, UK, UK regions and 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
August 2016 Survey Update
Issued 12th September 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 stuck in a low gear for
both manufacturing and services sectors

4. The UK’s composite PMI saw a ‘V-shaped recovery’ in
August while other economies saw their PMIs deteriorate

5. Developed & Emerging Markets’ PMIs still stuck in
low growth mode

6. Emerging Markets’ PMI remains in growth mode with
India reporting a marked improvement in August

7. Chinese services PMI picks-up in August while
manufacturing activity stagnates

8. Australia’s services & manufacturing PMIs both
plunge ‘Down Under’

9. France records a marked pick-up in growth, with Spain
& Ireland also improving. Slowdown in Germany & Italy

10. EZ manufacturing & services output growth eases. Growth
accelerates in retail while construction is still contracting

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

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

13. US ISM manufacturing PMI joins Japan in contraction
territory. EZ growth eases with no growth in Chinese PMI

14. Developed Markets still outperform Emerging Markets.
The latter has struggled to get > 50 since March 2015

15. New Zealand & the UK record the fastest rates of
manufacturing growth.

16. UK & to a lesser degree NI firms report a marked
turnaround in output growth in August

17. PMI suggests private sector growth stalls in Q3*

18. 2014 was the 1st year in 7 years that the 4 main indicators
recorded expansion, repeated in 2015 & 2016*

19. Output and orders fall in Q3* with pace of job creation
easing. £ weakness boosts growth in exports

20. NI firms report a return to growth in output but new
orders contracting & jobs growth slowing

21. Forward looking indicators suggest no meaningful
rebound amongst NI and UK firms

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

23. NI export orders rise for the 2nd successive month with £
weakness cited as a factor behind growth in RoI demand

24. RoI jobs growth accelerates while NI and UK report
lower rates of employment creation

25. Input cost inflation accelerates to a 58-month high
in August with output price inflation less marked

26. Regional
Comparisons

27. The North West tops the regional growth table in August
with Scotland still contracting

28. Scotland, London and the North East post
contractions over the last 3 months to August

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

30. NI reports a faster rate of job creation than the national
average with 3 regions posting job losses in August

31. NI posts the 2nd fastest rate of employment growth
of all UK regions over the last 3 months

32. Scotland & the North East (job losses) were the only
2 regions not to post growth over the last 12 months

33. Sectoral
Comparisons

34. Post-Brexit vote pessimism appears overdone with
manufacturing & services output returning to growth

35. The UK’s growth rate remained strong in Q2 at 0.6%
q/q but PMI suggests growth will be marginal in Q3

36. Services was the only sector in the RoI to report a
pick-up in growth with manufacturing output flat

37. NI retailers & manufacturing firms in growth mode in
Q3* while services and construction in decline

38. Services sector’s output growth stagnates with
construction contracting & manufacturing recovering

39. Divergence: the rate of jobs growth accelerates for
construction & manufacturing but stagnation in services

40. NI’s manufacturing firms report a marked pick-up in
activity across all measures

41. NI & UK manufacturing output growth rebounds
strongly while slowdown evident amongst RoI firms

42. NI manufacturing output growth back in line with
pre-downturn long-term average

43. NI & RoI firms report moderate rates of orders growth
with UK businesses reporting a pick-up in demand

44. NI manufacturing firms bucking the wider trend of
slower growth within the Eurozone

45. Input cost inflation rockets to a 64-month high in
August with firms raising prices at a record rate

46. NI’s manufacturing firms reporting a ‘V-shaped recovery’
in employment growth with the UK still shedding jobs

47. All key indicators across NI’s services sector point
to stagnation

48. NI & UK services sectors signal output has been flat on
average over the last 3 months

49. The rate of growth in NI’s services sector is moving
further away from its pre-downturn long-term average

50. Incoming orders dry up for NI & UK firms over the last 3
months while RoI firms post strong rates of growth

51. Input cost inflation accelerates to a 31-month high
with output prices increasing at a much weaker rate

52. NI & UK firms report muted rates of service sector
jobs growth with RoI’s growth rate still strong

53. NI retailers are still recruiting staff at a significant rate
but sales and orders growth remains very weak

54. NI retailers report a marked acceleration in input cost
inflation while output price rises pick-up too

55. NI’s construction firms experiencing a lack of
demand but are still increasing their staffing levels

56. Input cost inflation accelerating at a rapid rate with
firms increasing prices at a much weaker rate

57. UK & NI firms report a decline in output over the last 3
months in contrast to strong growth amongst RoI firms

58. NI & UK firms post a slump in new orders growth in
contrast to robust orders growth amongst RoI firms

59. UK firms report falling activity across all sectors
over the last 3 months

60. Slowdown in construction sector has led to an
increase supply of sub-contractors

61. Optimism amongst UK construction firms rises following
its recent slump but remains below its long-term average

62. RoI housing and commercial construction activity has
been improving while engineering output stagnates

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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