Ulster Bank NI PMI Slide pack September 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

September 2013 Survey Update
Issued 14th October 2013

Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com

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.

Global output growth slows in September due
to the services sector…
Global Output - PMI
65

Source: Markit Economics
Expansion

60
55
50

Contraction

45
40
35
30
Total

25
Apr-07

Mar-08

Feb-09

Manufacturing

Jan-10

Dec-10

Services

Nov-11

Oct-12

Sep-13

… but the Eurozone experiences an acceleration in
service sector activity with manufacturing growth slowing
Eurozone PMIs: Output
65
Expansion

Source: Markit Economics Output Indices

60
55
50

Contraction

45
40
35
30
Composite (M&S)

Manufacturing

Services

Construction

25
Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Top performers within manufacturing incl. US, UK & NI.
Underperformers incl. France, S.Africa, Greece & India
PMIs: Manufacturing Output September 2013
US
UK
NI
Netherlands
Switzerland
N.Zealand*
Czech Republic
Poland
Turkey
Ireland
Austria
Japan
EU
Canada
Global
Italy
Taiwan
Germany
EZ
Singapore
Spain
Denmark
Israel*
Russia
Brazil
Indonesia
China
Mexico
Australia
Vietnam
S.Korea
India
France
Greece
S.Africa

35

UK, NI & RoI

€

Source: Markit Economics Output Indices,
*Aug, for the US ISM is used.

40

45

50

55

60

65

70

The UK, NI & Ireland post the fastest rate of service
sector output growth in September
PMIs: Services Output September 2013
UK
Ireland
NI
US*
EU
Germany
Global
Japan
Italy
China
EZ
Russia
France
Emerging Markets
Brazil
Spain
Australia
India

€

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

35

40

45

50

55

60

65

Three of the four largest economies within the eurozone
are now expanding
Composite PMIs
65

(Manufacturing & Services ** Excludes Construction**)

Expansion

60
55
50

Contraction

45
40
35
Source: Markit Economics PMIs

30
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

Deceleration in the growth rates of China, UK, & the
US with the rate of growth picking up in the Eurozone
Composite PMIs

65
Eurozone

US (ISM)

China

UK
Expansion

60
55
50

Contraction

45
40
Source: Markit Economics PMIs, US includes construction

35
Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

The US & Japan posted an acceleration in manufacturing
activity in September
Manufacturing PMIs
65

US (ISM)

China

Japan

Eurozone

60
Expansion

55
50

Contraction

45
40
35
30

25
Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

Russia & Brazil post expansion but pace of contraction
accelerates in India
Composite PMIs
Brazil

Russia

India

Emerging Markets

No Change

65
60
Expansion

55
50

Contraction

45
40
35

30
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

… with Australia’s service sector still contracting
though manufacturing returned to growth
Australia - PMI
65
Manufacturing

Services

No Change

60
Expansion

55
50

Contraction

45
40
35

30
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

NI, UK & the RoI all post strong rates of growth in
September
Private Sector Business Activity - PMIs
**PMI Surveys Exclude Agriculture & Public Sector**

65
NI

UK

RoI
Expansion

60
55
50
45

Contraction

40
35

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

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

PMI suggests growth in DFP’s new private sector composite index
(combines indices for construction, services, agriculture & industrial production) in Q2 &Q3 2013

NI Private Sector Output Index Versus NI PMI
PSO Q/Q%

5
4

NICEI Left Hand Scale

PMI Right Hand Scale

PMI

50 mark is the threshold for expansion / contraction with PMI

65
60

3

Expansion

2

55

1
0

50

-1

45

-2

Contraction

-3
-4
-5

Source: New DFP Northern Ireland Composite Economic
Index (NICEI) & Ulster Bank / Markit Economics NI PMI

-6
2003 Q1 2004 Q3 2006 Q1 2007 Q3 2009 Q1 2010 Q3 2012 Q1 2013 Q3

40
35
30

NI firms report an increase in business activity, new
orders & employment in September
NI Private Sector Activity
Monthly
70
Business Activity

New Business

Employment
Expansion

65
60
55
50

Contraction

45
40
35
Source: Markit Economics & Ulster Bank NI PMI

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

Forward looking indicators suggest more growth in all
three economies in the months ahead
Private Sector New Orders
3 month moving average
NI

UK

Orders increasing

65

RoI

60
55
50

Orders Contracting

45
40
35

30
Sep-03

May-05

Jan-07

Sep-08

May-10

Jan-12

Sep-13

Surge in demand is leading to backlogs of work
Private Sector Backlogs
60
UK

RoI

Increasing

NI

55
50

Decreasing

45
40
35

30
Sep-03

May-05

Jan-07

Sep-08

May-10

Jan-12

Sep-13

NI firms post their 3rd successive increase in export
orders in September
NI New Export Business
Growth Accelerating

Monthly
65
New Export Orders

60

No Change

55
50

Contraction Accelerating

45
40
35
30
25
Source: Markit Economics & Ulster Bank

20
Sep-03

Sep-05

Sep-07

Sep-09

Sep-11

Sep-13

PMI underestimated job gains in 2012 (relative to official jobs survey).
PMI signals another quarter of employment growth in Q3 2013

NI Employment: PMI v QES*

PMI Index
60

Q/Q

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

Job
gains

55

1.0%
0.8%
0.5%
0.3%

Discontinuity in QES Series

50

0.0%
-0.3%

45

-0.5%
Job
losses

40

-1.0%

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

-1.3%
-1.5%

35

Sep-03

-0.8%

Dec-04

Mar-06

Jun-07

PMI Employment Index

Sep-08

Dec-09

No Change

Mar-11

Jun-12

QES Q/Q

Sep-13

Firms within the UK, RoI & NI all experience job gains in
September but the pace of growth eases for NI
Private Sector Employment Levels
Monthly

60

UK

RoI

55

Job Gains

NI

50
Job Losses

45
40
35

30
Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

Private sector’s profitability squeeze remains
NI Private Sector Profit Squeeze
3 Month Moving Average
Output Prices

Input Prices

No Change

80
Profits
squeeze

70

Inflation

60
50

Deflation

40
Source: Markit Economics & Ulster Bank NI

Price of goods &
services falling

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

PMIs experience an Indian summer in September with
strong growth reported everywhere…
Output / Business Activity
September 2013

PMI index
65

50 = No change

60.4

60

58.7

55

Expansion

55.7

50
Contraction

45

40
Lon NW EM SE SW UK Y&H Wal

NI East Scot WM NE

RoI

… all the UK regions post growth over the last 3 months
Q3 2013
PMI Index

50 = No change

65
60.2
57.7
56.0

55

Contraction

50

Expansion

60

45

40
NW Lon SE SW UK EM East Y&H WM Wal Scot NI

NE

RoI

…but NI is the only UK region to post a decline in
output over the last 12 months
PMI index

12 months to September 2013
50 = No change

60

53.2

Contraction

50
49.5

45

40
Wal Lon NW Y&H SE

UK Scot EM East SW WM NE

NI

Expansion

53.9

55

RoI

All the UK regions and the Republic of Ireland post
employment growth in September …
Employment Levels
September 2013

PMI Index

50 = No change

58
56
54.8

Increasing

54

53.6

52

51.4

50
Decreasing

48
46

44
WM NW Lon SW UK

SE Scot Wal East Y&H NI

EM

NE

RoI

… and over the last 3 months to September
Employment Levels
PMI Index
58

Q3 2013
50 = No change

56
54.5

Increasing

54
52.3

52

51.4

Decreasing

50
48
46

44
WM NW SW East Scot Lon UK Wal SE

NE

EM

NI Y&H

RoI

NI posts the steepest decline in employment & RoI the
sharpest rise over the last 12 months
Employment Levels
PMI Index

12 months to September 2013
50 = No change

54
52

51.1

Increasing

52.6

50
Decreasing

48.9

48
46
44

42
WM SE East Scot SW EM Wal UK Lon NW Y&H NE

NI

RoI

All three broad UK sectors maintain strong rates of
growth in September
UK Business Activity / Output - PMIs
70
Services

Manufacturing

Construction
Expansion

60

50
Contraction

40

30

20
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

UK economic growth accelerates in Q2 & Q3

PMI Index

65

UK GDP versus UK Composite PMI
UK Composite includes Construction
Source: ONS & Markit Economics, * refers to July & August

GDP Q/Q

1.5

60

1

55

0.5

50

0

45

-0.5

40

-1

35

-1.5

30

-2

25

-2.5

2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3
GDP Q/Q

PMI

PMI No Change

All three sectors of the RoI economy post growth (>50)
for the first time since May 2007
RoI Business Activity - PMIs
Monthly

65
Services

Construction

No Change

60
55

Expansion

Manufacturing

50
Contraction

45
40
35
30
25

20
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

All three broad sectors in NI reported increased
levels of business activity in Q3…
NI Private Sector Output
65

Manufacturing

Services

Construction
Expansion

60
55
50

Contraction

45
40
35

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

…with all sectors also reporting job gains over the last
3 months
NI PMI - Employment Index

65
Manufacturing

Services

Construction
Job Gains

60
55
50

Job Losses

45
40
35
30

25
Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

NI’s manufacturing sector posts an acceleration in jobs
growth, output & new orders over the last 3 months
NI Manufacturing Activity
Business activity

New Orders

Employment

60
55
50

Contraction accelerating

45
40
35
30

PMI

25
Sep-04

Mar-06

Sep-07

Growth accelerating

65

Mar-09

Sep-10

Mar-12

Sep-13

The UK, RoI and NI all witness an acceleration in
manufacturing output during the last 3 months
Manufacturing Output
65
UK

NI

RoI

No Change
Expansion

60
55
50
45

Contraction

40
35

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

The UK posts the strongest growth in new orders
Manufacturing New Orders
65
UK

NI

RoI

No Change
Expansion

60
55
50

Contraction

45
40
35
30

25
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

N.Ireland is outperforming its European competitors
Manufacturing Output - PMI
70
RoI

Italy

Spain

Greece

NI
Expansion

60

50

Contraction

40

30

20
Apr-07

Mar-08

Feb-09

Jan-10

Dec-10

Nov-11

Oct-12

Sep-13

Cost price inflation remains for local manufacturing
firms but pricing power is improving too
NI Manufacturing Input & Output Inflation
No Change

Input Costs

Output Prices

80

Profits
squeeze

70
Inflation

60
50

Deflation

40

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

PMI underestimated manufacturing job surge in Q2. PMI
suggests further job gains in Q3 2013
PMI Index
65

NI Manufacturing Employment: PMI v QES*

Q/Q
4%

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

60

Job
gains

Discontinuity in
QES Series

3%
2%

55
1%
50

0%

45

-1%
Job
losses

40

-2%
-3%

35

contraction

-4%
-5%

30

Sep-03 Dec-04 Mar-06

Jun-07 Sep-08 Dec-09 Mar-11


No Change

Jun-12 Sep-13
QES Q/Q

Recent growth in NI service sector output / orders is
feeding through into higher levels of employment…
NI Service Sector (excludes Retail)
Business activity

65

New Orders

Growth accelerating

70
Employment

60
55

Contraction accelerating

50
45
40
35

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

All three economies post an acceleration in output
growth in Q3 2013…
Services Output

70
UK

NI

RoI

No Change

65
Expansion

60
55
50
45

Contraction

40
35

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

… and strong new orders growth in the same three
economies
Services New Orders (excluding Retail )

70
UK

NI

RoI

No Change
Expansion

60

50
Contraction

40


30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

Pricing power remains very weak amongst NI’s services
sector whilst inflationary pressures remain
NI Services Input & Output Inflation
No Change

Input Costs

Output Prices

80
Profits
squeeze

70
Inflation

60
50

Deflation

40

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

…with employment growth accelerating in the RoI
and NI in Q3 2013
Services Employment
65
UK

RoI

NI

No Change
Expansion

60
55
50

Contraction

45
40
35

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

In Q3 the services PMI finally shows quarterly
employment growth for the first time since Q1 2008
PMI Index
65

NI Services Employment: PMI v QES*

Q/Q
1.5%

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

1.0%

60
Job
gains


55

0.5%

50

0.0%

45

-0.5%

contraction

Job losses

-1.0%

40

Sep-03

Dec-04

Mar-06

Jun-07

Sep-08


Dec-09

Mar-11

No Change

Jun-12

QES Q/Q

Sep-13

Retailers summer boom extends into September
Northern Ireland Retail PMI
3 monthly average

75
Business Activity

New Orders

Backlogs

No Change
Expansion

65

55
Contraction

45

35

25
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

Profits squeeze on local retailers eases significantly due
to increased pricing power
NI Retail Input & Output Inflation
90
Input Costs

Output Prices

No Change
Profits squeeze
narrowing

80

Inflation

70
60
50

Deflation

40

30
Sep-04

Mar-06

Sep-07

Mar-09

Sep-10

Mar-12

Sep-13

NI construction sector reports growth in output, new
orders and employment over the last 3 months
NI Construction PMI
Output

New Orders

Employment
Expansion

60
50 = No change

50

Contraction

40

30
Source: Markit Economics, Ulster Bank PMI

20
Mar-09

Dec-09

Sep-10

Jun-11

Mar-12

Dec-12

Sep-13

…but the profits squeeze continues
NI Construction Sector Profits Squeeze

PMI Index
Input Prices

Output Prices

No Change

70
Inflation

60
50

Deflation

40
30

20
Mar-09

Dec-09

Sep-10

Jun-11

Mar-12

Dec-12

Sep-13

NI’s construction PMI posted its first quarter of
employment growth in Q3 2013 since Q4 2007
PMI Index

NI Construction Employment: PMI v QES

Q/Q
5.0%

65
*QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms

60
55

Job
gains

2.5%
0.0%

50
45

-2.5%
40
-5.0%

35
30
25

contraction

Job losses

-7.5%
-10.0%

20

Sep-03 Dec-04 Mar-06

Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Sep-13


No Change

QES Q/Q

UK (58.9), NI (56.2) & RoI (55.7) construction sectors all
post healthy rates of growth in September
Construction Sector Output - PMI
PMI Index
NI

UK

RoI
Expansion

60

50
Contraction

40

30

20
Mar-09

Dec-09

Sep-10

Jun-11

Mar-12

Dec-12

Sep-13

New orders rising in all three economies
Construction Sector New Orders - PMI

PMI Index
UK

RoI

Expansion

NI

60

50
Contraction

40

30

20
Mar-09

Dec-09

Sep-10

Jun-11

Mar-12

Dec-12

Sep-13

Opportunities for NI firms within GB market. House building
sector expanding at its fastest rate in almost 10 years…
UK Construction Activity - PMIs

70
Housing Activity

Commercial Activity

Civil Engineering Activity
Expansion

60

50

Contraction

40

30

20
Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

…with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI

70
Housing Activity

Commercial Activity

Engineering Activity
Expansion

60
50 = No change

50

Contraction

40

30

20
Mar-07

Apr-08

May-09

Jun-10

Jul-11

Aug-12

Sep-13

Disclaimer
This document is intended for clients of Ulster Bank Limited and Ulster Bank Ireland Limited (together and separately, "Ulster Bank") and is
not intended for any other person. It does not constitute an offer or invitation to purchase or sell any instrument or to provide any service in
any jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or
engage in transactions in any of the instruments mentioned.

The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication and
are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be
construed as such.
This publication provides only a brief review of the complex issues discussed and recipients should not rely on information contained here
without seeking specific advice on matters that concern them. Ulster Bank make no representations or warranties with respect to the
information and disclaim all liability for use the recipient or their advisors make of the information.
Over-the-counter (OTC) derivates can involve a number of significant and complex risks which are dependent on the terms of the particular
transaction and your circumstances. In the event the market has moved against the transaction you have undertaken, you may incur
substantial costs if you wish to close out your position.

Calls may be recorded.

Slide 55

Ulster Bank NI PMI Slide pack September 2013

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