ulster bank ni slide pack november 2017

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 2017 Survey Update

Issued 11th December 2017

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 remains at 2½-yr high of 54.9.• Global manufacturing output growth quickens to 80-mth high• Growth accelerates in China, Russia & the EZ (notably France) • India sluggish (50.3) & Brazil contracting 48.9• EZ composite (57.5) highest since Apr-11.• Pick-up in EZ ‘Big 4’ growth rates - Germany 57.3, Italy 56.0,

Spain 55.2 & France 78-mth high of 60.3 • UK composite slips to 54.7 due to services (53.8). Construction

hits a 5-mth high of 53.1 & manufacturing at 51-mth high (58.2).• RoI business activity rebounds to a 3-mth high (57.7)• NI firms’ report an acceleration in growth rates for output (54.3)

orders (55.5) & jobs (53.5). But profit margins being squeezed with input cost inflation accelerating to 6-mth highs.

• Retail the fastest growing sector in NI for the 3rd month running

November 2017 PMIs – Key highlights

Global output growth remains at 2½-year high with manufacturing output growth at an 80-month high

The Eurozone & China show an improvement in November with the US, UK & Japan report a slowdown

Divergence between Developed Markets PMI growth rate and Emerging Markets narrowing slightly

Emerging Markets’ growth rate boosted by China and Russia. But Brazil is in contraction mode & India slowing

Chinese services PMI hits a 3-mth high but manufacturing activity at a 5-mth low

Eurozone output accelerating with France the star performer in November

Eurozone posts an acceleration in output growth in retail, services and manufacturing

PMI suggests another strong quarter of EZ economic growth in Q4

France & Russia top the service sector growth league with India & Brazil in contraction mode

Eurozone & Japan see an acceleration in manufacturing activity. While some easing with US & Chinese firms

Developed Markets outperforming Emerging Markets

NI & RoI firms report faster rates of growth in November

PMI more positive than Composite Index. Latter includes hefty falls in manufacturing output due to closure of JTI plant.

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015, 2016 & 2017 ytd

New orders & employment growth rates accelerate in Q4* relative to Q3. Export & output growth eases

NI firms report an acceleration (slight) in the pace of expansion in activity, new orders & employment

NI new orders growth accelerates. While UK & RoIfirms signal a stabilisation in orders growth

Backlogs of work mounting amongst NI firms

NI export orders growth accelerates off its 14-mth low

NI’s rate of employment growth quickens and remains above the UK’s for third successive month

NI’s private sector firms remain in hiring mode in Q3 & Q4*

Squeeze on profit margins intensifies in Q4

Regional Comparisons

North West & Wales top the regional growth table with Scotland at the bottom

The North East, South West & Scotland post the slowest rates of growth in the 3 months to November

The West Midlands reported the fastest growth rate over the last 12 months with Scotland the slowest

NI’s pace of job creation remains above the UK average and 5 other regions

NI’s employment growth rate outperforming 7 UK regions over the last 3 months

Scotland & the North East have reported the weakest rates of jobs growth over the last year. NI in line with UK

SectoralComparisons

Services activity eases while manufacturing & construction output growth accelerates markedly

PMI suggests a slight pick-up in economic growth in Q4

RoI construction and manufacturing firms report a marked acceleration in output growth

Retail & construction sector experience the biggest improvement in activity in Q4* relative to Q3

Retail records the fastest rates of growth followed by services, then manufacturing. Construction rising too.

Construction jobs accelerating sharply with hiring in services strong. Manufacturing staffing levels unchanged

Inflationary pressures intensifying across all sectors bar construction

NI’s manufacturing firms still report strong rates of growth in orders but employment growth flat

NI manufacturing output growth continues but at a much more subdued rate than in the UK and the RoI

NI manufacturing output growth (last 3 months) remains below its pre-downturn long-term average

UK, RoI & NI firms all report an acceleration in new orders growth

A strong €uro is not having a negative impact on EZ manufacturing output with Italy, RoI & France booming

£ weakness exacerbated input cost inflation. NI/UK input cost inflation rebounds from July’s 13-mth low

Input & output cost inflation hit record highs in Q1. But significant easing in Q2/Q3. Picking-up again in Q4

UK & RoI manufacturing firms report a pick-up in the pace of job creation while NI manufacturing flat

NI’s services sector expansion remains robust

NI & RoI service sectors report a deceleration in output growth but pace of expansion above the UK

The growth rate in NI’s services sector moving away (below) from its pre-downturn long-term average

New orders growth rate eases for RoI, UK & NI firms

Input cost inflation continues to pick-up again with output price inflation at a 21-mth high

NI firms increasing staffing levels at a robust rate and at a much faster pace than their UK counterparts

Retail sales & orders accelerating sharply while employment growth has flattened

NI retailers report a marked acceleration in their price rises due to cost pressures

NI’s construction firms report faster rates of growth in new orders, output and employment

Input cost inflation remains high with firms increasing prices at a much weaker rate

NI firms report a pick up in output growth and at a faster rate than UK firms. Both continue to lag the RoI

NI firms report faster rates of growth in new orders whilst growth in UK order books remains broadly flat

UK firms report a continued drop in commercial & civil engineering activity. Housebuilding remains strong

Construction sector still reporting a shortage of sub-contractors with rates charged rising

Optimism amongst UK construction firms remains below its long-run average

RoI housing & commercial construction activity reasonably but civil engineering activity still contracting

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

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

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