northern ireland pmi slide pack november 2012
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Slide pack for the Ulster Bank Northern Ireland PMI November 2012TRANSCRIPT
Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
November 2012 Survey Update
Issued 10th December 2012
Richard Ramsey
Chief Economist Northern Ireland
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 manufacturing output records positive growth for the first time in 5 months
Global Output - PMI
25
30
35
40
45
50
55
60
65
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Total Manufacturing Services
Source: Markit Economics ExpansionC
ontraction
All sectors within the eurozone are still contracting
Eurozone PMIs: Output
25
30
35
40
45
50
55
60
65
Nov-07 Sep-08 Jul-09 May-10 Mar-11 Jan-12 Nov-12
Whole Economy Manufacturing Services Construction
Source: Markit Economics Output Indices Expansion
Contraction
Israel, France & Greece post steepest falls in manufacturing output. Denmark & Mexico post strongest gains
PMIs: Manufacturing Output November 2012
35 40 45 50 55 60 65
IsraelFranceGreece
ItalyAustralia
TaiwanSouth Africa
EZSpain
S.KoreaNI
JapanEU
CzechSingapore
NetherlandsPoland
GermanyCanada
GlobalAustria
UKTurkeyChina
VietnamIndonesia
USN.Zealand
IrelandBrazil
RussiaIndia
SwitzerlandMexico
Denmark
Source: Markit Economics Output Indices
NI, RoI & UK
Republic of Ireland & the UK still outperforming their European competitors in November
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
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 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12
Eurozone US (ISM) China UK
Source: Markit Economics
Contraction
Expansion
… but US manufacturing is back below 50 mark
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Mar-08 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12
US (ISM) China Japan Eurozone
Source: Markit Economics
Contraction
Expansion
UK just above expansion threshold whilst the rate of contraction remains steep for Northern Ireland
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
NI UK RoI
Source: Markit & Ulster Bank NI PMI: 50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests further falls in private sector composite index (combines DFP indices for construction, services and industrial production) in Q3 & Q4 2012
NI Private Sector Output Index Versus NI PMI
-5
-4
-3
-2
-1
0
1
2
3
4
5
2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4*
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 2008 = 100) up to Q2 2012 & Markit Economics, *3 months to Nov-12
50 mark is the threshold for expansion / contraction with PMI
Expansion
Contraction
NI output, new orders and employment all contracting over the last 3 months
NI Private Sector Activity3 month moving average
30
35
40
45
50
55
60
65
70
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Pace of contraction in NI new orders remains steep
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Orders increasing
Orders C
ontracting
NI’s levels of work outstanding still falling at a rapid rate
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
Export orders have been falling since February 2008
NI New Export BusinessMonthly
20
25
30
35
40
45
50
55
60
65
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Grow
th AcceleratingC
ontraction Accelerating
PMI underestimated job gains in Q2 (relative to official Quarterly Employment Survey – QES) further job losses signalled in Q3 & Q4 2012
NI Employment: PMI (up to Nov-12) v QES*
35
40
45
50
55
60
Sep-03 Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
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
Northern Ireland’s rate of decline in employment levels eases sharply in November
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Input cost inflation accelerates with output prices and charges still falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services falling
Regional Comparisons
5 UK regions post a contraction in November with Northern Ireland posting the steepest decline…
Output / Business ActivityNovember 2012
50 = No change
41.6
50.2
53.8
35
40
45
50
55
Wal NW Lon SE NE Y&H Scot UK EM SW East WM NI RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
NI posts sharpest rate of decline over the last 3 months…
Output / Business Activity 3 months to November 2012
50 = No change
42.2
50.4
53.2
40
42
44
46
48
50
52
54
Wal NW East Y&H Lon SE EM UK WM Scot NE SW NI RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
……and over the last 12 months
Output / Business Activity Last 12 months to November 2012
50 = No change
52.2
50.7
43.7
40
45
50
55
WM Lon Y&H EM SE UK East NW Scot Wal SW NE NI RoI
PMI index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
After the North West, Northern Ireland posts the steepest decline in employment over the last month …
Employment LevelsNovember 2012
50 = No change
49.4
51.8
47.9
42
44
46
48
50
52
54
Y&H EM SE SW Scot East NE WM Wal UK Lon NI NW RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
…and steepest decline over the last 3 months…
Employment LevelsLast 3 months to November 2012
50 = No change
49
46.4
51.9
42
44
46
48
50
52
54
EM WM Y&H Scot SE UK East Wal SW NW NE Lon NI RoI
PMI index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
…and over the last 12 months
Employment LevelsLast 12 Months to November 2012
50 = No change
50.6
49.9
46.9
42
44
46
48
50
52
54
56
EM WM Y&H SE Scot East UK SW NE NW Wal Lon NI RoI
PMI index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
Manufacturing & Services output above the 50 expansion threshold in November
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK composite PMI was more positive than official GDP data (impacted by special factors) in 3 of the last 4 quarters
UK GDP versus UK Composite PMI
25
30
35
40
45
50
55
60
65
2007 Q3 2008 Q2 2009 Q1 2009 Q4 2010 Q3 2011 Q2 2012 Q1 2012 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 ,*Q4 PMI refers to October & November
Services & manufacturing are above 50 in the RoI
RoI Business Activity - PMIs3 month moving average
20
25
30
35
40
45
50
55
60
65
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Manufacturing Services Construction No Change
Source: Markit Economics
ExpansionC
ontraction
All sectors in NI contracting….
NI Private Sector Output 3 month moving average
30
35
40
45
50
55
60
65
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
… all NI sectors post employment declines over last 3 months although manufacturing posts growth in November
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Pace of decline in manufacturing eases with growth in employment and new orders in November
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI PMI
Grow
th acceleratingC
ontraction accelerating
NI & UK manufacturing performance is converging whilst the RoI continues to outperform
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Nov-03 May-05 Nov-06 May-08 Nov-09 May-11 Nov-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…and new orders still falling in NI & the UK
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
N.Ireland lagging economies elsewhere
Manufacturing Output - PMI3 month moving average
20
30
40
50
60
70
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
China Germany US NI UK
Source: Markit Economics PMIs
Contraction
Expansion
Ireland outperforming its euro zone partners
Manufacturing Output - PMI
20
30
40
50
60
70
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
RoI Italy Spain Greece NI
Source: Markit Economics PMIs, NI is 3 month moving average
Contraction
Expansion
Cost price inflation accelerating for local manufacturing firms & pricing power still falling = profits squeeze
NI Manufacturing Input & Output Inflation3 month moving average
30
40
50
60
70
80
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
No Change Input Costs Output Prices
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
Profits squeeze
PMI signals no major manufacturing job losses in Q3 and Q4 but FG Wilson announcement still to take effect
NI Manufacturing Employment: PMI (Nov-12) v QES*
30
35
40
45
50
55
60
65
Sep-03 Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
PMI Index
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Q/Q
PMI Employment Index No Change QES Q/Q
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages
Discontinuity in QES Series
Job losses
Job gains
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI firms
RoI growth accelerates while NI-UK divergence within service sector remains…
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…with significant gap in new orders remaining
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…with employment levels still falling in NI & now UK
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The PMI has signalled more job losses than the official data have indicated so far. But PMI includes private sector only
NI Services Employment: PMI (up to Nov-12) v QES*
40
45
50
55
60
65
Sep-03 Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
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
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction,PMI 3mth averages
*QES is DFP's official Quarterly Employment Survey of the number of jobs in NI and includes the public sector
Local retailers still reporting falling orders & activity
Northern Ireland Retail PMI3 monthly average
25
30
35
40
45
50
55
60
65
70
Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
Profits squeeze on local retailers intensifiesNI Retail Input & Output Inflation
3 month moving average
30
40
50
60
70
80
90
Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Input Costs Output Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI
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 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…….with profits squeeze intensifying
NI Construction Sector Profits Squeeze3 month moving average
20
30
40
50
60
70
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
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 (to Nov-12) v QES*
20
25
30
35
40
45
50
55
60
65
Sep-03 Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
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,PMI 3mth averages
Significant NI-UK divergence remains with output
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
… and with new orders falling in NI, UK & RoI
Construction Sector New Orders - PMI3 month moving average
20
30
40
50
60
Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12
PMI Index
NI UK RoI
Source: Markit Economics
ExpansionC
ontraction
Growth opportunities for NI firms within GB will wane as activity eases but pick-up in civil engineering sector
UK Construction Activity - PMIs3 month moving average
20
30
40
50
60
70
Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Housing Activity Commercial Activity Civil Engineering Activity
Source: Markit Economics
ExpansionC
ontraction
Lack of opportunities in the RoI with all construction sub-sectors declining in November
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
Mar-07 Aug-08 Jan-10 Jun-11 Nov-12
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 51
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