slide pack ulster bank ni pmi march 2016

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 2016 Survey Update

Issued 11th April 2016

Richard RamseyChief Economist Northern Ireland

www.ulstereconomix.comrichard.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 improves in March

All countries bar Japan report an improvement in their composite PMIs in March

Developed & Emerging Markets’ PMIs improve in March with Emerging Markets hitting a 10-month high

Emerging Markets’ PMI back above 50 with India & Russia both improving in March. Brazil’s recession continues

Chinese manufacturing PMI records its best reading in 13 months with composite PMI at an 11-month high

Diverging sector performance ‘Down Under’

France stagnant in March with Italy slowing to a 12-month low but growth accelerates in Spain & RoI

Eurozone manufacturing output growth rises but services slows with retail & construction contracting

Following an easing in GDP growth in H2-15, the Eurozone composite PMI signals a further slowdown in Q1-16

The Republic of Ireland and Northern Ireland continue to post the fastest rates of service sector output growth

US manufacturing activity returned to growth in the US, accelerated in EZ with Japan & China still contracting

Developed Markets still outperform Emerging Markets. The latter climbs above 50 for the first time in a year

Australia, Switzerland & Denmark record the fastest rates of manufacturing output growth. BRICS still struggling

UK output growth picks up in March but NI output expands at a faster rate for the second month in a row

PMI suggests private sector growth stabilises in Q4-15 but accelerates in Q1 2016

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 but growth slowed

Output & orders growth accelerate in Q1-16 relative to Q4 with exports slightly weaker & employment the same

NI firms reported a pick-up in output & new orders growth with rates of job creation broadly unchanged

NI firms report a pick-up in new orders growth but still lagging behind the RoI. UK new orders growth eases

NI & RoI firms still reporting rising backlogs while their UK counterparts continue to post declines

NI export orders hit a 20-month high in March aided by sterling weakness & new business from the RoI

RoI jobs growth continues at a robust rate while NI and UK report similar rates of growth

Input cost and output price inflation ease

Regional Comparisons

All UK regions bar Scotland & the North East signal growth in March NI at the top of the regional league table

All UK regions bar Scotland posted growth in Q1 with NI outperforming the UK

The RoI reported the fastest growth rate in business activity over the last year with NI & Scotland the slowest

The North East posts a sharp fall in employment levels with NI’s rate of job creation marginally above the UK average

Scotland & the North East are the only 2 regions to report falls in employment in Q1. NI above the UK average

Scotland, the North East & NI posted the weakest rates of jobs growth over the last year with the RoI the strongest

SectoralComparisons

Growth remains subdued across all sectors

The UK’s growth rate in Q4 improved slightly to 0.5% q/q, in line with the PMI. A slower rate of growth expected in Q1

RoI manufacturing & services output growth picks up in March as construction eases from its record high

NI retailers & services firms posted a marked pick-up in business activity in Q1-16 relative to Q4-15

Services sector output accelerating, construction slowing and manufacturing broadly flat

Rate of jobs growth eases within services & construction sectors while manufacturing job losses continue

NI’s manufacturing firms report a marginal rise in output growth but declines in new orders and jobs

NI manufacturing output flat in Q1 and still lags well behind the UK and the RoI

NI firms report a marked divergence in manufacturing orders growth than their equivalents in the UK & RoI

Manufacturing output for NI and Greece is broadly flat in March

Higher wage costs are driving input costs higher with output price deflation continuing

Slowdown in global manufacturing is hitting employment levels most notably within the UK & NI

NI services sector experiences a pick-up in output and new orders growth with employment growth easing

NI’s service sector output reports a marked acceleration in its growth rate with the UK equivalent slowing

The rate of growth in NI’s services sector accelerates to pre-downturn long-term average

NI firms report a marked pick-up in new orders growth, overtaking the UK but still lagging behind the RoI

Input cost & output price inflation ease

NI & UK firms report an easing in the rate of service sector employment growth in Q1 and both lag the RoI

NI retailers report a marked pick-up in demand following a slowdown in Q4. Employment growth remains strong

NI retailers report flat input costs with output prices falling at their fastest rate since March 2009

NI’s construction firms still in expansion mode though rates of growth in output & employment are slowing

Input cost inflation accelerating with local firms enjoying a high degree of pricing power

Output growth for RoI firms hits a record high in Q1 with pace of growth easing for NI & UK firms

New orders growth accelerating in the RoI with NI firms’ order books growing at a faster rate than their UK equivalents

UK firms report a slowdown in the rate of growth in house building & commercial with a pick-up in civil engineering

UK sub-contractors remain in short-supply with rates charged still rising albeit at slower rates than in 2015

Optimism amongst UK construction firms has eased to its long-term average

All aspects of RoI construction activity have reported a marked acceleration in their growth rates

RoI’s construction industry still reporting a decrease in the availability of sub-contractors & rising rates of pay

RoI construction firms still remain very optimistic about the year ahead and well above the long-term average

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