Ulster Bank PMI slide pack, March 2013

Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

Includes analysis of Global, Eurozone, UK, UK Regions, NI &

Republic of Ireland economic performance by sector

March 2013 Survey Update

Issued 15th

April 2013

Richard Ramsey

Chief Economist Northern Ireland

[email protected]

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 = Expansion

Data at a sector level are more volatile and 3‐month moving averages

have been used to

more accurately identify the broad trends.

Global output growth picks up in March…

Global Output - PMI

25

30

35

40

45

50

55

60

65

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13

Total Manufacturing Services

Source: Markit Economics

ExpansionC

ontraction

… but all sectors within the Eurozone are still contracting

Eurozone PMIs: Output

25

30

35

40

45

50

55

60

65


Composite (M&S) Manufacturing Services Construction

Source: Markit Economics Output Indices Expansion

Contraction

Greece, Australia, France & Italy post steepest falls in manufacturing output. Israel* posts strongest gain (*Feb)

PMIs: Manufacturing Output March 2013

35 40 45 50 55 60 65

GreeceAustralia

FranceItaly

SpainEZEU

AustriaUK

S.AfricaIreland

CanadaPoland

NetherlandSwitzerland

CzechGermany

SingaporeIndonesia

JapanRussia

NIIndia

VietnamTurkeyGlobal

S.KoreaUS

BrazilMexico

DenmarkChina

N.ZealandTaiwanIsrael*

Source: Markit Economics Output Indices, *February

NI, RoI & UK

Services output expanding for BRICs, US, Germany, Japan, UK & Ireland. France, Spain & Italy post the steepest declines

PMIs: Services Output March 2013

40 45 50 55 60

FranceSpain

ItalyEZEUNI

AustraliaBrazil

GermanyIndia

IrelandUK

Emerging MarketsGlobalJapanChina

RussiaUS*

Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services

€

The 2nd, 3rd & 4th largest economies within the eurozone are contracting at a rapid rate

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

30

35

40

45

50

55

60

65


Source: Markit Economics PMIs

Contraction

Expansion

US remains the best performer relative to China, UK & EZ

Composite PMIs (Manufacturing & Services ** Excludes Construction**)

35

40

45

50

55

60

65

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13

Eurozone US (ISM) China UK


ExpansionC

ontraction

… and US and China are neck and neck in terms of their manufacturing PMIs

Manufacturing PMIs

25

30

35

40

45

50

55

60

65


US (ISM) China Japan Eurozone


Contraction

Expansion

UK posts modest growth in March with business activity flat for the RoI and the rate of contraction eases for NI

Private Sector Business Activity - PMIs

30

35

40

45

50

55

60

65

Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13

NI UK RoI

Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction

Expansion

Contraction

**PMI Surveys Exclude Agriculture & Public Sector**

PMI suggests private sector composite index (combines DFP indices for construction, services & industrial production) in Q1 2013 to be flat

NI Private Sector Output Index Versus NI PMI

-5

-4

-3

-2

-1

0

1

2

3

4

5

2004 Q1 2005 Q3 2007 Q1 2008 Q3 2010 Q1 2011 Q3 2013 Q1

PSO Q/Q%

30

35

40

45

50

55

60

65PMI

UB PSO Left Hand Scale UB PMI Right Hand Scale

Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics

50 mark is the threshold for expansion / contraction with PMI

Expansion

Contraction

NI output, new orders and employment all post modest contractions over the last 3 months

NI Private Sector Activity3 month moving average

30

35

40

45

50

55

60

65

70


Business Activity New Business Employment

Source: Markit Economics & Ulster Bank NI PMI

ExpansionC

ontraction

Pace of contraction in NI new orders eases

Private Sector New Orders3 month moving average

30

35

40

45

50

55

60

65

Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13

NI UK RoI


Orders increasing

Orders C

ontracting

NI’s levels of work outstanding sees its pace of decline ease markedly over the last 3 months

Private Sector Backlogs3 month moving average

30

35

40

45

50

55

60

Mar-03 Nov-04 Jul-06 Mar-08 Nov-09 Jul-11 Mar-13

NI UK RoI


Increasing D

ecreasing

The pace of decline in export orders accelerates in March

NI New Export BusinessMonthly

20

25

30

35

40

45

50

55

60

65


New Export Orders No Change

Source: Markit Economics & Ulster Bank NI

Grow

th Accelerating

Contraction A

ccelerating

PMI underestimated job gains in Q2 & Q3 (relative to official jobs survey) further job losses signalled in Q4 2012 but flat in Q1 2013

NI Employment: PMI v QES*

35

40

45

50

55

60


PMI Index

-1.5%

-1.3%

-1.0%

-0.8%

-0.5%

-0.3%

0.0%

0.3%

0.5%

0.8%

1.0%Q/Q

PMI Employment Index No Change QES Q/Q

Discontinuity in QES Series

Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes the public sector

Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages

The UK, RoI & NI all see a fall in their respective employment indices with NI posting a decline in staffing levels

Private Sector Employment LevelsMonthly

30

35

40

45

50

55

60

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13

NI UK RoI


Job Gains

Job Losses

Input cost inflation eases in March (but up over last 3 months) with output prices and charges still falling

NI Private Sector Profit Squeeze3 Month Moving Average

30

40

50

60

70

80


Output Prices Input Prices No Change

InflationD

eflation


Profits squeeze

Price of goods & services falling

Regional Comparisons

3 UK regions & the RoI post a contraction in business activity in March

Output / Business ActivityMarch 2013

50 = No change

50.9

48.949.9

40

45

50

55

Lon Wal Y&H SE EM Scot UK NW East WM SW NI NE RoI

PMI index

ExpansionC

ontraction


The North East posts the sharpest rate of decline over the last 3 months followed by NI…

Output / Business Activity 3 months to March 2013

50 = No change

48.5

51.151.9

40

42

44

46

48

50

52

54

56

Wal Y&H Lon SE Scot EM East UK NW WM SW NI NE RoI

PMI Index


Expansion

Contraction

…but NI has posted the steepest decline over the last 12 months

Output / Business Activity 12 months to March 2013

50 = No change

51.551.1

44.7

40

45

50

55

Lon Y&H Wal WM EM Scot SE UK East NW SW NE NI RoI

PMI index

ExpansionC

ontraction


Three English regions & NI report falling employment levels in March …

Employment LevelsMarch 2013

50 = No change

50.1

49.0

50.8

44

46

48

50

52

54

WM NE East Scot EM Wal UK SE Lon SW NW NI Y&H RoI

PMI Index

IncreasingD

ecreasing


…and 4 UK regions (incl. NI) post job losses over last 3 months…

Employment LevelsLast 3 months to March 2013

50 = No change

49.5

50.6

52.1

44

46

48

50

52

54

SE East WM EM Lon Scot Wal UK NE NW Y&H NI SW RoI

PMI Index

IncreasingD

ecreasing


NI posts the steepest decline in employment over the last 12 months

Employment Levels12 months to March 2013

50 = No change

50.451.2

47.8

42

44

46

48

50

52

54

EM WM SE East Scot Y&H UK Wal Lon SW NE NW NI RoI

PMI Index

IncreasingD

ecreasing


Sectoral Comparisons

UK service sector growth accelerates in March, but manufacturing & construction post contractions

UK Business Activity / Output - PMIs

20

30

40

50

60

70


Services Manufacturing Construction


ExpansionC

ontraction

UK composite PMI suggests Q1 2013 GDP growth will be marginal at best

UK GDP versus UK Composite PMI

25

30

35

40

45

50

55

60

65

2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1

PMI Index

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5GDP Q/Q

GDP Q/Q PMI PMI No Change

Source: ONS & Markit Economics

Manufacturing joins construction below 50 level in the RoI

RoI Business Activity - PMIs3 month moving average

20

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction No Change


ExpansionC

ontraction

NI services & construction sectors contracting but manufacturing is growing

NI Private Sector Output 3 month moving average

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Expansion

Contraction

…with services and construction sectors still reporting falling employment levels

NI PMI - Employment Index 3 month moving average

25

30

35

40

45

50

55

60

65


Manufacturing Services Construction


Job Gains

Job Losses

Manufacturing posts output, employment and new orders growth over the last three months

NI Manufacturing Activity3 month moving average

25

30

35

40

45

50

55

60

65


Business activity New Orders Employment


Grow

th acceleratingC

ontraction accelerating

NI outperforming the UK and the RoI in terms of manufacturing output growth

Manufacturing Output3 month moving average

30

35

40

45

50

55

60

65


UK NI RoI No Change


Contraction

Expansion

NI posts the strongest growth in new orders

Manufacturing New Orders3 month moving average

25

30

35

40

45

50

55

60

65


UK NI RoI No Change


Contraction

Expansion

N.Ireland is outperforming its European competitors

Manufacturing Output - PMI

20

30

40

50

60

70


RoI Italy Spain Greece NI

Source: Markit Economics PMIs, NI is 3 month moving average

Contraction

Expansion

Cost price inflation easing for local manufacturing firms and output prices are rising (return of pricing power)

NI Manufacturing Input & Output Inflation3 month moving average

30

40

50

60

70

80


No Change Input Costs Output Prices

InflationD

eflation


Profits squeeze

PMI signals job gains in Q1 but some redundancies announced have still to take effect

NI Manufacturing Employment: PMI v QES*

30

35

40

45

50

55

60

65


PMI Index

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Q/Q


Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages


Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms

RoI & UK growth continues while NI’s pace of decline eases

Services Output (excluding Retail)3 month moving average

30

35

40

45

50

55

60

65

70


UK NI RoI No Change


Contraction

Expansion

New orders growth slowing in the RoI & picking up in the UK. Meanwhile NI still contracting

Services New Orders (excluding Retail ) 3 month moving average

30

40

50

60

70


UK NI RoI No Change


Contraction

Expansion

…with employment levels still falling in NI over the last three months

Services Employment3 month moving average

30

35

40

45

50

55

60

65


UK RoI NI No Change


Contraction

Expansion

The services PMI signalled modest employment declines in Q4 (& Q1). But QES posted job gains in Q4

NI Services Employment: PMI v QES*

40

45

50

55

60

65


PMI Index

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Q/Q



Job losses

Job gains

*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI and includes the public sector

Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages

Local retailers still reporting falling orders & activity

Northern Ireland Retail PMI3 monthly average

25

35

45

55

65

75


Business Activity New Orders Backlogs No Change


Expansion

Contraction

Profits squeeze on local retailers appears to be easing

NI Retail Input & Output Inflation3 month moving average

30

40

50

60

70

80

90


Input Costs Output Prices No Change

InflationD

eflation


Profits squeeze

NI construction sector still in the midst of a severe downturn

NI Construction PMI3 month moving average

20

30

40

50

60

Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13

Output New Orders Employment

Source: Markit Economics, Ulster Bank PMI

ExpansionC

ontraction

50 = No change

…with profits squeeze continuing

NI Construction Sector Profits Squeeze3 month moving average

20

30

40

50

60

70


PMI IndexInput Prices Output Prices No Change

Source: Markit Economics & Ulster Bank PMI

InflationD

eflation

NI PMI has been a reasonably good predictor of actual job losses in the official employment surveys (QES)

NI Construction Employment: PMI v QES

20

25

30

35

40

45

50

55

60

65


PMI Index

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

Q/Q



Job losses

Job gains

*QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms

Source: DFP, Ulster Bank & Markit PMI Index 50 denotes threshold between expansion / contraction,PMI 3mth averages

UK, RoI & NI all post contractions in construction output

Construction Sector Output - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

… and with new orders falling in NI, UK & RoI

Construction Sector New Orders - PMI3 month moving average

20

30

40

50

60


PMI Index

NI UK RoI


ExpansionC

ontraction

Growth opportunities for NI firms within GB will wane as activity eases

UK Construction Activity - PMIs3 month moving average

20

30

40

50

60

70


Housing Activity Commercial Activity Civil Engineering Activity


ExpansionC

ontraction

Lack of opportunities in the RoI with all construction sub-sectors declining in March

Republic of Ireland Construction Activity - PMI3 month moving average

20

30

40

50

60

70


Housing Activity Commercial Activity Engineering Activity

Source: Markit Economics & Ulster Bank

ExpansionC

ontraction

50 = No change

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Ulster Bank PMI slide pack, March 2013

Economy & Finance

Transcript of Ulster Bank PMI slide pack, March 2013