ulster bank northern ireland purchasing managers index (pmi) - november 2013
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Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
November 2013 Survey Update
Issued 9th
December 2013
Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com
Twitter @UB_Economics
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 accelerates in November due to both the services & manufacturing sectors
Global Output - PMI
25
30
35
40
45
50
55
60
65
Jun-07 May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13
Total Manufacturing Services
Source: Markit Economics
ExpansionC
ontraction
… but the Eurozone experiences a slowdown in November due to its services sector
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13
Composite (M&S) Manufacturing Services Construction
Source: Markit Economics Output Indices ExpansionC
ontraction
Top performers within manufacturing include Denmark, US, UK & NI. Underperformers include Australia, France & Spain
PMIs: Manufacturing Output November 2013
35 40 45 50 55 60 65 70
AustraliaFranceSpain
IndonesiaS.KoreaGreece
BrazilRussia
SingaporeIsrael*
IndiaMexico
VietnamChina
EZItaly
IrelandS.Africa
EUGermany
TaiwanGlobalTurkeyPolandAustria
CanadaN.Zealand*SwitzerlandNetherlands
Czech RepublicJapan
NIUKUS
Denmark
Source: Markit Economics Output Indices, *Sep, for the US ISM is used.
NI, UK & RoI
€
N.Ireland, the UK & the Republic of Ireland post the fastest rates of service sector output growth in November
PMIs: Services Output November 2013
35 40 45 50 55 60 65
IndiaItaly
FranceAustralia
EZSpain
RussiaJapan
Emerging MarketsBrazilChina
EUGlobal
US*Germany
IrelandUKNI
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
The 2nd & 3rd largest economies within the eurozone are contracting again with the UK & RoI still outperforming
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Mar-07 Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13
Source: Markit Economics PMIs
Contraction
Expansion
The UK, US & EZ saw their composite PMIs slip in November while China’s moved higher
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
35
40
45
50
55
60
65
May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13
Eurozone US (ISM) China UK
Source: Markit Economics PMIs, US includes construction
ExpansionC
ontraction
The US, Japan & the Eurozone all posted an acceleration in manufacturing activity in November
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13
US (ISM) China Japan Eurozone No Change
Source: Markit Economics
Contraction
Expansion
PMIs for Russia & Brazil slipped in November but growth in Emerging Markets accelerates overall
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Jun-07 May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13
Brazil Russia India Emerging Markets No Change
Source: Markit Economics
Contraction
Expansion
Australia’s manufacturing sector joins its services sector in contraction territory in November
Australia - PMI
30
35
40
45
50
55
60
65
Mar-07 Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
UK & the RoI see growth rates ease in November while NI posts its fastest rate of growth since March 2004
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
NI UK RoI
Source: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests growth in DFP’s new private sector composite index (combines indices for construction, services, agriculture & industrial production) in Q3 & Q4
NI Private Sector Output Index Versus NI PMI
-6-5-4
-3-2-1012
345
2003 Q2 2004 Q4 2006 Q2 2007 Q4 2009 Q2 2010 Q4 2012 Q2 2013 Q4*
PSO Q/Q%
30
35
40
45
50
55
60
65
PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: New DFP Northern Ireland Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI, * for PMI refers to average for October & November
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI firms report an acceleration in business activity & new orders growth but pace of job creation slows
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Buoyant order books suggest more growth in the months ahead. NI posts its fastest rate of growth since July 2004
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Surge in demand is leading to backlogs of work with NI index posting a record high in November
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Nov-03 Jul-05 Mar-07 Nov-08 Jul-10 Mar-12 Nov-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
NI firms post their 5th successive increase in export orders in November
NI New Export Business
20
30
40
50
60
70
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
PMI underestimated QES job gains in 2012. PMI for Q3 signals fastest rate of jobs growth since Q4 2007 with even stronger growth in Q4
NI Employment: PMI v QES**
35
40
45
50
55
60
2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*
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
**QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector
Discontinuity in QES Series
Job losses
Job gains
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to average for October & November
UK, RoI & NI firms all experienced jobs growth in November albeit at a weaker rate than October
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Private sector’s profitability squeeze remains but pricing power is on the rise
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services rising
Regional Comparisons
PMIs Indian summer continues with strong growth everywhere & NI moving up the PMI league table…
Output / Business ActivityNovember 2013
50 = No change
60.5
55.6
60.2
40
45
50
55
60
65
70
SE EM Lon SW UK NI NW East WM NE Wal Y&H Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
…all the UK regions post growth over the last 3 months
Output / Business Activity 3 months to November 2013
50 = No change
58.8
56.7
60.8
40
45
50
55
60
65
70
Lon EM SE SW NW UK East NI WM Y&H Wal Scot NE RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
… and over the last 12 months
Output / Business Activity 12 months to November 2013
50 = No change
52.5
55.7
53.8
45
50
55
60
Lon SE NW Wal Y&H EM UK SW East Scot WM NI NE RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
All the UK regions and the Republic of Ireland post employment growth in November …
Employment LevelsNovember 2013
50 = No change
54.8
51.2
55.5
46
48
50
52
54
56
58
60
Lon SW WM East SE UK NW Scot EM Wal NE NI Y&H RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
… and over the last 3 months to November
Employment Levels3 months to November 2013
50 = No change
54.7
51.9
55.3
44
46
48
50
52
54
56
58
Lon WM SW SE UK NW East Wal Scot NI EM Y&H NE RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
NI posts a marginal decline in employment with the West Midlands & RoI the sharpest rise over the last 12 months
Employment Levels12 months to November 2013
50 = No change
52.1
53.2
49.9
46
48
50
52
54
WM SE East Lon SW UK Scot Wal NW EM Y&H NE NI RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
All 3 UK sectors maintain strong rates of growth in November with services still close to its 16-year high
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK economic growth accelerates in Q2, Q3 & Q4
UK GDP versus UK Composite PMIUK Composite includes Construction
25
30
35
40
45
50
55
60
65
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4*
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, * refers to October & November average
The RoI’s manufacturing & service sectors experience a slowdown in their growth rates in November
RoI Business Activity - PMIsMonthly
20
25
30
35
40
45
50
55
60
65
Jun-07 May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13
Manufacturing Services Construction No Change
Source: Markit Economics
Contraction
Expansion
All 3 broad sectors within NI saw their rates of growth in output accelerate over the last 3 months
Northern Ireland Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
…with all sectors also reporting job gains over the last 3 months
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
NI’s manufacturing sector posts an acceleration in orders, employment & output growth over the last 3 months
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
UK & NI manufacturing firms signal very strong rates of growth in output during the last 3 months
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The UK posts the strongest rate of growth in new orders
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
N.Ireland is outperforming its European competitors
Manufacturing Output - PMI
20
30
40
50
60
70
Mar-07 Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13
RoI Italy Spain Greece NI
Source: Markit Economics PMIs
Contraction
Expansion
Cost price inflation remains for local manufacturing firms but pricing power is improving due to increased demand
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
PMI underestimated manufacturing job surge in Q2. But PMI suggests further job gains in Q3 & Q4 2013
NI Manufacturing Employment: PMI v QES**
30
35
40
45
50
55
60
65
2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
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 firms
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to average for October & November
Recent growth in NI service sector output has fed through into higher levels of employment…
NI Service Sector (excludes Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI
Grow
th acceleratingC
ontraction accelerating
All 3 economies post strong growth in services output in November with NI activity accelerating…
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
… and an acceleration in new orders growth too
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
Output prices within service sector firms over the last 3 months rise at their fastest rate in over 5 years
NI Services Input & Output Inflation3 month moving average
30
40
50
60
70
80
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
Employment growth is accelerating in the UK but NI firms signal a slowdown in service sector jobs growth
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
In Q3 the services PMI shows quarterly jobs growth for the 1st time since Q1 2008 with further growth in Q4
NI Services Employment: PMI v QES*
40
45
50
55
60
65
2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*
PMI Index
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
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 and includes the public sector
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to October & November average
Retailers summer boom extends into November but pace of growth has slowed
Northern Ireland Retail PMI3 monthly average
25
35
45
55
65
75
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Local retailers maintain pricing power in November
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Nov-04 May-06 Nov-07 May-09 Nov-10 May-12 Nov-13
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
NI construction sector reports growth in output, new orders & employment over the last 3 months…
NI Construction PMI3 month moving average
20
30
40
50
60
Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…and output prices have been rising
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13
PMI Index
Input Prices Output Prices No Change
Source: Markit Economics & Ulster Bank PMI
InflationD
eflation
NI’s construction PMI posted its 1st quarter of jobs growth in Q3 2013 since Q4 2007 with further growth in Q4
NI Construction Employment: PMI v QES**
20
25
30
35
40
45
50
55
60
65
2003 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4*
PMI Index
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
Q/Q
PMI Employment Index No Change QES Q/Q
Discontinuity in QES Series
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 Economics, PMI Index 50.0 denotes threshold between expansion / contraction, * for PMI refers to average for October & November
Construction output accelerates in the UK, RoI and NI over the last 3 months
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
New orders growth accelerating in all 3 economies
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Opportunities for NI firms within GB market. House building growth hits a 10-year high…
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
…with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
Mar-07 Jul-08 Nov-09 Mar-11 Jul-12 Nov-13
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 55
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