Slide pack for the Ulster Bank Northern Ireland PMI, December 2012, including charts providing comparison with global PMIs, including the Eurozone, UK, and RoI
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Northern Ireland PMI slide pack, December 2012
1. Ulster Bank Northern Ireland
Purchasing Managers Index (PMI)
December 2012 Survey Update
Issued 14th January 2013
Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com
2. 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.
3. Global output records its highest reading in 9 months with
manufacturing posting its 2nd successive month of growth
Global Output - PMI
65
Source: Markit Economics
Expansion
60
55
50
45
Contraction
40
35
30
Total Manufacturing Services
25
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
4. All sectors within the Eurozone are still contracting
Eurozone PMIs: Output
65
Source: Markit Economics Output Indices
Expansion
60
55
50
Contraction
45
40
35
30
Whole Economy Manufacturing Services Construction
25
Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12 Dec-12
5. Greece, Australia & Spain post steepest falls in
manufacturing output. Mexico & India post strongest gains
PMIs: Manufacturing Output December 2012
Mexico
India
US
Turkey
UK
Denmark
Brazil
Indonesia
China
Ireland
Russia
Global
Switzerland
Taiwan
Vietnam NI, RoI & UK
Netherlands
S.Korea
Canada
Israel
N.Zealand
Austria
Poland
EU
Germany
Singapore
EZ
Italy
NI
South Africa
Japan
Czech Republic
France
Spain Source: Markit Economics Output Indices
Australia
Greece
35 40 45 50 55 60 65
6. Services output expanding for BRICs, US, Germany, Japan &
Ireland. EZ, UK, NI & Australia all posting contractions
PMIs: Services Output December 2012
Brazil
US*
Russia
Ireland
India
Global
Emerging Markets
Germany
Japan
China
UK
EU
EZ €
Italy
France
Spain Source: Markit Economics Output Indices, * US Non-
Australia manufacturing which is wider than services
NI
35 40 45 50 55 60 65 70 75
7. Republic of Ireland & the UK still outperforming their
European competitors in December
Composite PMIs
(Manufacturing & Services ** Excludes Construction**)
65
60
Expansion
55
50
Contraction
45
40
35
Source: Markit Economics PMIs
30
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
8. US remains the best performer relative to China, UK & EZ
Composite PMIs
(Manufacturing & Services ** Excludes Construction**)
65
Eurozone US (ISM) China UK
60
Expansion
55
50
Contraction
45
40
Source: Markit Economics
35
Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
9. … but Chinese manufacturing is expanding at a faster
rate than the US
Manufacturing PMIs
65
US (ISM) China Japan Eurozone
60
Expansion
55
50
Contraction
45
40
35
30
Source: Markit Economics
25
Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12
10. UK just below expansion threshold whilst the rate of
contraction remains steep for Northern Ireland
Private Sector Business Activity - PMIs
**PMI Surveys Exclude Agriculture & Public Sector**
65
NI UK RoI
60
Expansion
55
50
45
Contraction
40
35 Source: Markit & Ulster Bank NI PMI: 50 = threshold
between expansion / contraction
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
11. 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
PSO Q/Q% PMI
UB PSO Left Hand Scale UB PMI Right Hand Scale
5 65
50 mark is the threshold for expansion / contraction with PMI
4
60
3
Expansion
2 55
1
50
0
45
-1
-2 40
-3
Contraction
35
-4
Source: Ulster Bank Private Sector Output (Index 2008 = 100) up to Q2 2012 & Markit Economics
-5 30
2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4
12. NI output, new orders and employment all contracting
over the last 3 months
NI Private Sector Activity
3 month moving average
70
Business Activity New Business Employment
65
Expansion
60
55
50
45
Contraction
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
13. Pace of contraction in NI new orders remains steep
with UK flat
Private Sector New Orders
3 month moving average
65
Orders increasing
NI UK RoI
60
55
50
45
Orders Contracting
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
14. NI’s levels of work outstanding still falling at a rapid rate
Private Sector Backlogs
3 month moving average
60
NI UK RoI
Increasing
55
50
45
Decreasing
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
15. Export orders have been falling since February 2008
NI New Export Business
Monthly
Growth Accelerating
65
New Export Orders No Change
60
55
50
45
Contraction Accelerating
40
35
30
25
Source: Markit Economics & Ulster Bank NI PMI
20
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
16. PMI underestimated job gains in Q2 & Q3 (relative to official Quarterly
Employment Survey – QES) further job losses signalled in Q4 2012
PMI Index NI Employment: PMI v QES* Q/Q
60 1.0%
*QES is DFP's official Quarterly Employment Survey of the
number of jobs in NI & includes the public sector 0.8%
55 Job 0.5%
gains
0.3%
Discontinuity in QES Series
50 0.0%
-0.3%
45 -0.5%
Job
losses
-0.8%
40 -1.0%
Source: DFP, Ulster Bank & Markit Economics, PMI
Index 50.0 denotes threshold between expansion / -1.3%
contraction,PMI 3mth averages
35 -1.5%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
PMI Employment Index No Change QES Q/Q
17. Northern Ireland’s rate of decline in employment levels
eases sharply in December while the RoI posts jobs growth
Private Sector Employment Levels
Monthly
60
NI UK RoI
Job Gains
55
50
Job Losses
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
18. Input cost inflation remains a problem with output
prices and charges still falling
NI Private Sector Profit Squeeze
3 Month Moving Average
80
Output Prices Input Prices No Change
Profits
70 squeeze
Inflation
60
50
Deflation
40
Price of goods &
Source: Markit Economics & Ulster Bank NI PMI services falling
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
20. 4 UK regions post a contraction in December with
Northern Ireland posting the steepest decline…
Output / Business Activity
PMI index December 2012
55
50 = No change 52.9
Expansion
50
49.9
45
44.8
Contraction
40
Source: Markit Economics & Ulster Bank NI PMI
35
Y&H Wal WM Scot East SW Lon NE UK SE EM NW NI RoI
21. NI posts sharpest rate of decline over the last 3 months…
Output / Business Activity
3 months to December 2012
PMI Index 50 = No change
54 53.6
Expansion
52
50
49.9
Contraction
48
46
44
42 42.3
Source: Markit Economics & Ulster Bank NI PMI
40
Wal Y&H Scot SE Lon NW East WM NE UK EM SW NI RoI
22. ……and over the last 12 months
Output / Business Activity
PMI index 2012
50 = No change
55
Expansion
51.9
51.1
50
Contraction
45
43.6
Source: Markit Economics & Ulster Bank NI PMI
40
WM Lon Y&H EM SE UK East NW Scot Wal SW NE NI RoI
23. After the North West, Northern Ireland posts the
steepest decline in employment over the last month …
Employment Levels
December 2012
PMI Index
54 50 = No change
Increasing
52.2
52
50
Decreasing
49.8
48
47.9
46
44
Source: Markit Economics & Ulster Bank NI PMI
42
EM Y&H SE Wal Scot East UK SW WM Lon NE NI NW RoI
24. …and steepest decline over the last 3 months…
Employment Levels
PMI index Last 3 months to December 2012
54
50 = No change
Increasing
52.2
52
50
Decreasing
49.4
48
46.8
46
44
Source: Markit Economics & Ulster Bank NI PMI
42
EM Y&H SE Scot WM East SW Wal UK NE Lon NW NI RoI
25. …and over the last 12 months
Employment Levels
PMI index
2012
54 50 = No change
Increasing
52
50.5 50.3
50
Decreasing
48
47
46
44
Source: Markit Economics & Ulster Bank NI PMI
42
EM WM Y&H SE Scot East UK SW Wal Lon NE NW NI RoI
27. UK manufacturing output shoots above the 50 expansion
threshold but services & construction fall below it
UK Business Activity / Output - PMIs
70
Services Manufacturing Construction
Expansion
60
50
Contraction
40
30
Source: Markit Economics
20
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
28. UK composite PMI raises the prospect of negative GDP
Q4 reading
UK GDP versus UK Composite PMI
PMI Index GDP Q/Q
65 1.5
60 1
55 0.5
50 0
45 -0.5
40 -1
35 -1.5
30 -2
Source: ONS & Markit Economics
25 -2.5
2007 Q3 2008 Q2 2009 Q1 2009 Q4 2010 Q3 2011 Q2 2012 Q1 2012 Q4
GDP Q/Q PMI PMI No Change
29. Services & manufacturing are above 50 in the RoI
RoI Business Activity - PMIs
3 month moving average
65
Manufacturing Services Construction No Change
Expansion
60
55
50
Contraction
45
40
35
30
25
Source: Markit Economics
20
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
30. All sectors in NI contracting….
NI Private Sector Output
3 month moving average
65
Manufacturing Services Construction
60
Expansion
55
50
Contraction
45
40
35
Source: Markit Economics & Ulster Bank NI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
31. … with services and construction sectors still reporting
falling employment levels
NI PMI - Employment Index
3 month moving average
65
Manufacturing Services Construction
Job Gains
60
55
50
45
Job Losses
40
35
30
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
32. Manufacturing posts employment and new orders
growth in Q4 2012
NI Manufacturing Activity
3 month moving average
65
Growth accelerating
Business activity New Orders Employment
60
55
50
Contraction accelerating
45
40
35
30
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
33. NI & UK manufacturing performance is diverging
whilst the RoI continues to outperform
Manufacturing Output
3 month moving average
65
UK NI RoI No Change
Expansion
60
55
50
45
Contraction
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
34. All 3 economies post growth in new orders for the
first time since April 2011
Manufacturing New Orders
3 month moving average
65
UK NI RoI No Change
Expansion
60
55
50
45
Contraction
40
35
30
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
35. N.Ireland manufacturing lagging economies elsewhere
Manufacturing Output - PMI
3 month moving average
70
Source: Markit Economics PMIs
Expansion
60
50
Contraction
40
30
China Germany US NI UK
20
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
36. Ireland outperforming its Eurozone partners & NI
Manufacturing Output - PMI
70
RoI Italy Spain Greece NI
Expansion
60
50
40
Contraction
30
Source: Markit Economics PMIs, NI is 3 month moving average
20
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
37. Cost price inflation accelerating for local manufacturing
firms & pricing power still falling = profits squeeze
NI Manufacturing Input & Output Inflation
3 month moving average
No Change Input Costs Output Prices
80
Profits
squeeze
70
Inflation
60
50
Deflation
40
Source: Markit Economics & Ulster Bank NI
30
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
38. PMI signals no major manufacturing job losses in Q3 and
Q4 but FG Wilson announcement still to take effect
PMI Index
NI Manufacturing Employment: PMI v QES* Q/Q
65 4%
*QES is DFP's official Quarterly Employment
Survey of the number of jobs in NI firms 3%
60 Discontinuity in
QES Series Job
gains 2%
55
1%
50 0%
45 -1%
Job
losses -2%
40
-3%
35 Source: DFP, Ulster Bank & Markit Economics, PMI
Index 50.0 denotes threshold between expansion / -4%
contraction,PMI 3mth averages
30 -5%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
PMI Employment Index No Change QES Q/Q
39. RoI growth continues while NI & UK post contractions
in service sector output
Services Output (excluding Retail)
3 month moving average
70
UK NI RoI No Change
65
Expansion
60
55
50
Contraction
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
40. 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
70
UK NI RoI No Change
Expansion
60
50
Contraction
40
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
41. …with employment levels still falling in NI & UK
Services Employment
3 month moving average
65
UK RoI NI No Change
Expansion
60
55
50
45
Contraction
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
42. The PMI signals modest employment declines for the
service sector in Q4. But PMI includes private sector only
PMI Index
NI Services Employment: PMI v QES* Q/Q
65 1.5%
*QES is DFP's official Quarterly Employment Survey of the number
of jobs in NI and includes the public sector
60 1.0%
Discontinuity in QES Series
55 0.5%
Job
gains
50 0.0%
45 -0.5%
Source: DFP, Ulster Bank & Markit Economics, PMI
Index 50.0 denotes threshold between expansion /
contraction,PMI 3mth averages Job losses
40 -1.0%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
PMI Employment Index No Change QES Q/Q
43. Local retailers still reporting falling orders & activity
Northern Ireland Retail PMI
3 monthly average
70
Business Activity New Orders Backlogs No Change
65
Expansion
60
55
50
Contraction
45
40
35
30
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
44. Profits squeeze on local retailers intensifies
NI Retail Input & Output Inflation
3 month moving average
90
Input Costs Output Prices No Change
Profits
80
squeeze
Inflation
70
60
50
Deflation
40
Source: Markit Economics & Ulster Bank NI
30
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
45. NI construction sector still in the midst of a severe downturn
NI Construction PMI
3 month moving average
Output New Orders Employment
Expansion
60
50 = No change
50
Contraction
40
30
Source: Markit Economics, Ulster Bank PMI
20
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
46. …….with profits squeeze continuing
NI Construction Sector Profits Squeeze
3 month moving average
PMI Index
Input Prices Output Prices No Change
70
Inflation
60
50
Deflation
40
30
Source: Markit Economics & Ulster Bank PMI
20
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
47. NI PMI has been a reasonably good predictor of actual
job losses in the official employment surveys (QES)
PMI Index
NI Construction Employment: PMI v QES Q/Q
65 5.0%
*QES is NI's official Quarterly Employment Survey of the no. of jobs in NI firms
60
Job 2.5%
55 gains
Discontinuity in QES Series
50 0.0%
45
-2.5%
40
35 -5.0%
30
Source: DFP, Ulster Bank & Markit Economics, PMI Job losses -7.5%
25 Index 50.0 denotes threshold between expansion /
contraction,PMI 3mth averages
20 -10.0%
Dec-03 Jun-05 Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
PMI Employment Index No Change QES Q/Q
48. UK, RoI & NI all recording contractions in output
Construction Sector Output - PMI
3 month moving average
PMI Index
NI UK RoI
Expansion
60
50
Contraction
40
30
Source: Markit Economics
20
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
49. … and with new orders falling in NI, UK & RoI
Construction Sector New Orders - PMI
3 month moving average
PMI Index
NI UK RoI
Expansion
60
50
Contraction
40
30
Source: Markit Economics
20
Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12
50. Growth opportunities for NI firms within GB will wane
as activity eases but pick-up in civil engineering sector
UK Construction Activity - PMIs
3 month moving average
70
Housing Activity Commercial Activity Civil Engineering Activity
Expansion
60
50
40
Contraction
30
Source: Markit Economics
20
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
51. Lack of opportunities in the RoI with all construction
sub-sectors declining in December
Republic of Ireland Construction Activity - PMI
3 month moving average
70
Housing Activity Commercial Activity Engineering Activity
Expansion
60
50 = No change
50
40
Contraction
30
Source: Markit Economics & Ulster Bank
20
Apr-07 Sep-08 Feb-10 Jul-11 Dec-12
52. 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 52