northern ireland pmi slide pack, december 2012
DESCRIPTION
Slide pack for the Ulster Bank Northern Ireland PMI, December 2012, including charts providing comparison with global PMIs, including the Eurozone, UK, and RoITRANSCRIPT
Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
December 2012 Survey Update
Issued 14th January 2013
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 output records its highest reading in 9 months with manufacturing posting its 2nd successive month of growth
Global Output - PMI
25
30
35
40
45
50
55
60
65
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12 Dec-12
Whole Economy Manufacturing Services Construction
Source: Markit Economics Output Indices Expansion
Contraction
Greece, Australia & Spain post steepest falls in manufacturing output. Mexico & India post strongest gains
PMIs: Manufacturing Output December 2012
35 40 45 50 55 60 65
GreeceAustralia
SpainFrance
Czech RepublicJapan
South AfricaNI
ItalyEZ
SingaporeGermany
EUPolandAustria
N.ZealandIsrael
CanadaS.Korea
NetherlandsVietnamTaiwan
SwitzerlandGlobalRussiaIrelandChina
IndonesiaBrazil
DenmarkUK
TurkeyUS
IndiaMexico
Source: Markit Economics Output Indices
NI, RoI & UK
Services output expanding for BRICs, US, Germany, Japan & Ireland. EZ, UK, NI & Australia all posting contractions
PMIs: Services Output December 2012
35 40 45 50 55 60 65 70 75
NIAustralia
SpainFrance
ItalyEZEUUK
ChinaJapan
GermanyEmerging Markets
GlobalIndia
IrelandRussia
US*Brazil
Source: Markit Economics Output Indices, * US Non-manufacturing which is wider than services
€
Republic of Ireland & the UK still outperforming their European competitors in December
Composite PMIs (Manufacturing & Services ** Excludes Construction**)
30
35
40
45
50
55
60
65
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
Eurozone US (ISM) China UK
Source: Markit Economics
Contraction
Expansion
… but Chinese manufacturing is expanding at a faster rate than the US
Manufacturing PMIs
25
30
35
40
45
50
55
60
65
Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
US (ISM) China Japan Eurozone
Source: Markit Economics
Contraction
Expansion
UK just below 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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Pace of contraction in NI new orders remains steep with UK flat
Private Sector New Orders3 month moving average
30
35
40
45
50
55
60
65
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
Grow
th Accelerating
Contraction A
ccelerating
PMI underestimated job gains in Q2 & Q3 (relative to official Quarterly Employment Survey – QES) further job losses signalled in Q4 2012
NI Employment: PMI v QES*
35
40
45
50
55
60
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-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 December while the RoI posts jobs growth
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Input cost inflation remains a problem with output prices and charges still falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
4 UK regions post a contraction in December with Northern Ireland posting the steepest decline…
Output / Business ActivityDecember 2012
50 = No change
44.8
49.9
52.9
35
40
45
50
55
Y&H Wal WM Scot East SW Lon NE UK SE EM NW 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 December 2012
50 = No change
42.3
49.9
53.6
40
42
44
46
48
50
52
54
Wal Y&H Scot SE Lon NW East WM NE UK EM SW NI RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
Expansion
Contraction
……and over the last 12 months
Output / Business Activity 2012
50 = No change
51.951.1
43.6
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 LevelsDecember 2012
50 = No change
49.8
52.2
47.9
42
44
46
48
50
52
54
EM Y&H SE Wal Scot East UK SW WM Lon NE 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 December 2012
50 = No change
49.4
46.8
52.2
42
44
46
48
50
52
54
EM Y&H SE Scot WM East SW Wal UK NE Lon NW NI RoI
PMI index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
…and over the last 12 months
Employment Levels2012
50 = No change
50.5 50.3
47
42
44
46
48
50
52
54
EM WM Y&H SE Scot East UK SW Wal Lon NE NW NI RoI
PMI index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK manufacturing output shoots above the 50 expansion threshold but services & construction fall below it
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK composite PMI raises the prospect of negative GDP Q4 reading
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
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
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI
Expansion
Contraction
… with services and construction sectors still reporting falling employment levels
NI PMI - Employment Index 3 month moving average
25
30
35
40
45
50
55
60
65
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Manufacturing Services Construction
Source: Markit Economics & Ulster Bank NI PMI
Job Gains
Job Losses
Manufacturing posts employment and new orders growth in Q4 2012
NI Manufacturing Activity3 month moving average
25
30
35
40
45
50
55
60
65
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Business activity New Orders Employment
Source: Markit Economics & Ulster Bank NI PMI
Grow
th acceleratingC
ontraction accelerating
NI & UK manufacturing performance is diverging whilst the RoI continues to outperform
Manufacturing Output3 month moving average
30
35
40
45
50
55
60
65
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
All 3 economies post growth in new orders for the first time since April 2011
Manufacturing New Orders3 month moving average
25
30
35
40
45
50
55
60
65
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
N.Ireland manufacturing lagging economies elsewhere
Manufacturing Output - PMI3 month moving average
20
30
40
50
60
70
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
China Germany US NI UK
Source: Markit Economics PMIs
Contraction
Expansion
Ireland outperforming its Eurozone partners & NI
Manufacturing Output - PMI
20
30
40
50
60
70
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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 v QES*
30
35
40
45
50
55
60
65
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-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 continues while NI & UK post contractions in service sector output
Services Output (excluding Retail)3 month moving average
30
35
40
45
50
55
60
65
70
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
New orders growth slowing in the UK and continues to contract at a rapid rate in NI
Services New Orders (excluding Retail ) 3 month moving average
30
40
50
60
70
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
UK NI RoI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
…with employment levels still falling in NI & UK
Services Employment3 month moving average
30
35
40
45
50
55
60
65
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
UK RoI NI No Change
Source: Markit Economics & Ulster Bank NI PMI
Contraction
Expansion
The PMI signals modest employment declines for the service sector in Q4. But PMI includes private sector only
NI Services Employment: PMI v QES*
40
45
50
55
60
65
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-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
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Business Activity New Orders Backlogs No Change
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
Profits squeeze on local retailers intensifies
NI Retail Input & Output Inflation3 month moving average
30
40
50
60
70
80
90
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
Output New Orders Employment
Source: Markit Economics, Ulster Bank PMI
ExpansionC
ontraction
50 = No change
…….with profits squeeze continuing
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 v QES
20
25
30
35
40
45
50
55
60
65
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-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
UK, RoI & NI all recording contractions in output
Construction Sector Output - PMI3 month moving average
20
30
40
50
60
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-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
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-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
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-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 December
Republic of Ireland Construction Activity - PMI3 month moving average
20
30
40
50
60
70
Apr-07 Sep-08 Feb-10 Jul-11 Dec-12
Housing Activity Commercial Activity Engineering Activity
Source: Markit Economics & Ulster Bank
ExpansionC
ontraction
50 = No change
Slide 52
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