Slide pack for the December 2013 Ulster Bank NI PMI, including analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

1. Ulster Bank Northern Ireland
Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
December 2013 Survey Update
Issued 13th January 2014
Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com
Twitter @UB_Economics

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 growth ends the year expanding at a
faster rate than it started 2013 for both sectors
Global Output - PMI
65
Source: Markit Economics
Expansion
60
55
50
Contraction
45
40
35
30
Total
Manufacturing
Services
25
Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13

4. The Eurozone started 2013 will all sectors contracting
now only construction is waiting for a return to growth
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
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13

5. Vast majority of economies posting output growth with US
& the UK the top performers. France is still contracting
PMIs: Manufacturing Output December 2013
US
UK
N.Zealand*
Netherlands
Taiwan
Japan
Germany
Austria
Denmark
Czech Republi c
Italy
NI
EU
Global
EZ
Turkey
Ireland
S.Africa*
Canada
Poland
Switzerland
Mexico
Spain
Vietnam
Brazil
China
Israel**
India
S.Korea
Greece
Russia
Indonesia
Singapore
Australia
France
35
UK, NI & RoI
€
Source: Markit Economics Output Indices,
*November ** October. For the US ISM is used.
40
45
50
55
60
65
70

6. The Republic of Ireland, the UK and NI post the fastest
rates of service sector output growth in December
PMIs: Services Output December 2013
Ireland
UK
NI
US*
Spain
Global
Russia
Germany
EU
Japan
Brazil
Emerging Markets
EZ
China
Italy
France
India
Australia
€
Source: Markit Economics Output Indices, *
US Non-manufacturing which is wider than
services
35
40
45
50
55
60
65

7. Composite PMIs for Ireland, Spain and Italy all improve in
December while France sees its contraction accelerate
Composite PMIs
65
(Manufacturing & Services
** Excludes Construction**)
Expansion
60
55
50
Contraction
45
40
35
30
Source: Markit Economics PMIs
25
Apr-07
Feb-08
Dec-08
Oct-09
Aug-10 Jun-11
Apr-12
Feb-13
Dec-13

8. The UK, US & China saw their composite PMIs slip in
December while the Eurozone’s moved higher
Composite PMIs
(Manufacturing & Services
** Excludes Construction**)
65
Eurozone
US (ISM)
China
UK
Expansion
60
55
50
Contraction
45
40
Source: Markit Economics PMIs, US includes construction
35
Jun-08
May-09
Apr-10
Mar-11
Feb-12
Jan-13
Dec-13

9. The US, Japan & the Eurozone all posted an acceleration
in manufacturing activity in December
Manufacturing PMIs
65
US (ISM)
China
Japan
Eurozone
No Change
60
Expansion
55
50
Contraction
45
40
35
30
Source: Markit Economics
25
Jun-08
May-09
Apr-10
Mar-11
Feb-12
Jan-13
Dec-13

10. Growth eased in the Emerging Markets PMI due to a
slowdown in China and India
Composite PMIs
(Manufacturing & Services
Brazil
Russia
India
** Excludes Construction**)
Emerging Markets
No Change
65
Expansion
60
55
50
Contraction
45
40
35
Source: Markit Economics
30
Jul-07
Jun-08
May-09
Apr-10
Mar-11
Feb-12
Jan-13
Dec-13

11. Australia’s manufacturing and services sectors
remain in contraction territory in December
Australia - PMI
65
Manufacturing
Services
No Change
60
Expansion
55
50
Contraction
45
40
35
Source: Markit Economics PMIs
30
Apr-07
Feb-08
Dec-08
Oct-09
Aug-10
Jun-11
Apr-12
Feb-13
Dec-13

12. The UK & NI see growth rates ease in December while
the RoI’s posts an acceleration in its rate of growth
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
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

13. PMI suggests growth in DFP’s new private sector composite index
(combines indices for construction, services, agriculture & industrial production) in Q3 & Q4
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
Expansion
3
2
65
60
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 Q2 2004 Q4 2006 Q2 2007 Q4 2009 Q2 2010 Q4 2012 Q2 2013 Q4
40
35
30

14. NI firms report an acceleration in job creation but
pace of business activity & new orders growth slows
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
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

15. Buoyant order books suggest more growth in the months
ahead. New orders remain close to recent 9-year high
Private Sector New Orders
Monthly
NI
UK
Orders increasing
65
RoI
60
55
50
Orders Contracting
45
40
35
Source: Markit Economics & Ulster Bank NI
30
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

16. Surge in demand is leading to backlogs of work with
NI index accelerating rapidly in Q4
Private Sector Backlogs
3 month moving average
60
UK
RoI
Increasing
NI
55
50
Decreasing
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03
Aug-05
Apr-07
Dec-08
Aug-10
Apr-12
Dec-13

17. NI firms post their 6th successive rise in export orders
with December the fastest rate of growth in over 6 years
NI New Export Business
70
No Change
60
Expansion
New Export Orders
50
Contraction
40
30
20
Source: Markit Economics & Ulster Bank NI
PMI
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

18. PMI underestimated QES job gains in 2012. PMI for Q3 signals fastest
rate of jobs growth since Q4 2007 with even stronger growth in Q4
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 public sector
Job
gains
55
0.8%
0.5%
0.3%
Discontinuity in QES Series
50
0.0%
-0.3%
-0.5%
45
Job
losses
40
-1.0%
Source: DFP, Ulster Bank & Markit Economics,
PMI Index 50.0 denotes threshold between
expansion / contraction
-1.3%
-1.5%
35
2003 Q4
-0.8%
2005 Q4
2007 Q4
PMI Employment Index
2009 Q4
No Change
2011 Q4
QES Q/Q
2013 Q4

19. UK, RoI & NI firms all experienced strong rates of job
creation in December
Private Sector Employment Levels
Monthly
60
UK
RoI
Job Gains
NI
55
50
Job Losses
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

20. Private sector’s profitability squeeze remains but
pricing power is on the rise
NI Private Sector Profit Squeeze
3 Month Moving Average
Output Prices
Input Prices
No Change
80
Profits
squeeze
70
Inflation
60
50
30
Price of goods &
services rising
Source: Markit Economics & Ulster Bank NI
PMI
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Deflation
40
Dec-13

21. Regional
Comparisons

22. Strong growth across all UK regions and the RoI in
December
Output / Business Activity
PMI Index
70
December 2013
50 = No change
65
59.5
58.6
56.5
55
Expansion
60
50
Contraction
45
Source: Markit Economics & Ulster Bank NI PMI
40
SW WM NE Lon SE East UK EM NW Wal
NI Y&H Scot
RoI

23. …all the UK regions & the RoI post growth in Q4
Output / Business Activity
Q4 2013
PMI Index
70
50 = No change
65
60.5
58.1
57.7
55
Contraction
50
45
Source: Markit Economics & Ulster Bank NI PMI
40
Lon SW EM SE
UK NW WM East Wal
Expansion
60
NI
NE Y&H Scot
RoI

24. … and over the last 12 months
Output / Business Activity
2013
PMI Index
60
50 = No change
56.6
54.2
53.4
Contraction
50
Source: Markit Economics & Ulster Bank NI PMI
45
Lon NW
SE
EM Wal UK
SW Y&H East WM Scot
Expansion
55
NI
NE
RoI

25. All the UK regions and the Republic of Ireland post
employment growth in December …
Employment Levels
December 2013
PMI Index
60
50 = No change
58
55.4
56
55.2
54.5
Increasing
54
52
Decreasing
50
48
Source: Markit Economics & Ulster Bank NI PMI
46
SW Lon SE
UK NW East NI WM Y&H Scot EM Wal NE
RoI

26. … and over the last 3 months
Employment Levels
Q4 2013
PMI Index
58
50 = No change
55.5
56
55.2
Increasing
54
52.9
52
Decreasing
50
48
46
Source: Markit Economics & Ulster Bank NI PMI
44
Lon SW
SE
UK East WM NW Wal
NI
Scot EM Y&H NE
RoI

27. NI posts its first annual increase in private sector
employment since 2007
Employment Levels
2013
PMI Index
56
50 = No change
54
53.5
Increasing
52.6
52
50.4
Decreasing
50
48
Source: Markit Economics & Ulster Bank NI PMI
46
WM Lon
SE
SW East UK NW Scot Wal EM
NE Y&H NI
RoI

28. Sectoral
Comparisons

29. All 3 UK sectors maintain strong rates of growth in
December
UK Business Activity / Output - PMIs
70
Services
Manufacturing
Construction
Expansion
60
50
Contraction
40
30
Source: Markit Economics
20
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13

30. UK posts strong rates of economic growth in Q2-Q4
UK GDP versus UK Composite PMI
PMI Index
65
UK Composite includes Construction
GDP Q/Q
Source: ONS & Markit Economics
1.5
60
1
55
0.5
50
0
45
-0.5
40
-1
35
-1.5
30
-2
25
-2.5
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4
GDP Q/Q
PMI
PMI No Change

31. The RoI’s manufacturing & service sectors experience
a pick-up in their growth rates in December
RoI Business Activity - PMIs
Monthly
65
Services
Construction
No Change
60
55
Expansion
Manufacturing
50
Contraction
45
40
35
30
25
Source: Markit Economics
20
Apr-07
Feb-08
Dec-08
Oct-09
Aug-10
Jun-11
Apr-12
Feb-13
Dec-13

32. All 3 broad sectors within NI saw robust rates of
output growth in Q4
Northern Ireland Private Sector Output
3 month moving average
65
Manufacturing
Services
Construction
Expansion
60
55
50
Contraction
45
40
35
Source: Markit Economics &
Ulster Bank NI PMI
30
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

33. …with all sectors also reporting job gains over the last
3 months
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-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

34. NI manufacturers continue to report strong rates of growth
in orders, employment & output over the last 3 months
NI Manufacturing Activity
3 month moving average
Business activity
New Orders
Employment
60
55
50
40
35
30
Source: Markit Economics & Ulster Bank NI
Contraction accelerating
45
Growth accelerating
65
25
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

35. UK, RoI & NI manufacturing firms continue to post strong
rates of growth in output during the last 3 months
Manufacturing Output
3 month moving average
65
UK
NI
RoI
No Change
Expansion
60
55
50
Contraction
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

36. The UK posts the strongest rate of growth in new orders
Manufacturing New Orders
3 month moving average
65
UK
NI
RoI
No Change
Expansion
60
55
50
Contraction
45
40
35
30
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

37. Lately NI has been outperforming its European
competitors
Manufacturing Output - PMI
70
RoI
Italy
Spain
Greece
NI
Expansion
60
50
Contraction
40
30
Source: Markit Economics PMIs
20
Apr-07
Feb-08
Dec-08
Oct-09
Aug-10
Jun-11
Apr-12
Feb-13
Dec-13

38. Cost price inflation remains for local manufacturing firms
but pricing power is improving due to increased demand
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 PMI
30
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

39. PMI underestimated jobs surge in Q2. Following further
job creation in Q3, PMI suggests more of the same in Q4
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
Source: DFP, Ulster Bank & Markit Economics,
PMI Index 50.0 denotes threshold between
expansion / contraction
-4%
30
2003 Q4
-5%
2005 Q4
2007 Q4
PMI Employment Index
2009 Q4
2011 Q4
No Change
2013 Q4
QES Q/Q

40. Recent growth in NI service sector output has fed
through into higher levels of employment…
NI Service Sector (excludes Retail)
3 month moving average
Business activity
New Orders
Growth accelerating
70
Employment
65
60
55
Contraction accelerating
50
45
40
35
Source: Markit Economics & Ulster Bank NI
30
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

41. All 3 economies post strong growth in services output
in December with NI & RoI activity accelerating in Q4…
Services Output (excluding Retail)
3 month moving average
70
UK
NI
RoI
No Change
Expansion
60
50
Source: Markit Economics & Ulster Bank NI PMI
Contraction
40
30
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

42. … and an acceleration in new orders growth too
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
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

43. Output prices within service sector firms over the
last 3 months rise at their fastest rate in over 5 years
NI Services 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-05
Dec-07
Dec-09
Dec-11
Dec-13

44. Employment growth is accelerating within the service
sector in the UK, RoI and NI in Q4
Services Employment
3 month moving average
65
UK
RoI
NI
No Change
Expansion
60
55
50
Contraction
45
40
35
Source: Markit Economics & Ulster Bank NI PMI
30
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13

45. In Q4 the services PMI shows the fastest rate of
quarterly jobs growth since Q4 2007
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
60
1.0%
Job
gains
Discontinuity in QES Series
55
0.5%
50
0.0%
45
-0.5%
Source: DFP, Ulster Bank & Markit Economics,
PMI Index 50.0 denotes threshold between
expansion / contraction
Job losses
40
2003 Q4
-1.0%
2005 Q4
2007 Q4
PMI Employment Index
2009 Q4
No Change
2011 Q4
QES Q/Q
2013 Q4

46. NI retailers continue to report strong rates of growth
in business activity and new orders in December
Northern Ireland Retail PMI
3 monthly average
75
Business Activity
New Orders
Backlogs
No Change
Expansion
65
55
Contraction
45
35
Source: Markit Economics & Ulster Bank NI PMI
25
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

47. Local retailers maintain pricing power in December
NI Retail Input & Output Inflation
3 month moving average
90
Input Costs
Output Prices
No Change
80
Profits squeeze
Inflation
70
60
50
Deflation
40
Source: Markit Economics & Ulster Bank NI
30
Dec-04
Jun-06
Dec-07
Jun-09
Dec-10
Jun-12
Dec-13

48. NI construction sector continues to report growth in
output, new orders & employment over the last 3 months
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
Apr-09
Dec-09
Aug-10
Apr-11
Dec-11
Aug-12
Apr-13
Dec-13

49. …and output prices have been rising
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
20
Apr-09
Dec-09
Aug-10
Apr-11
Dec-11
Aug-12
Apr-13
Dec-13

50. NI’s construction PMI posted its 1st quarter of jobs growth
in Q3 2013 since Q4 2007 with further growth in Q4
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
Job
gains
55
2.5%
Discontinuity in QES Series
0.0%
50
45
-2.5%
40
-5.0%
35
Job losses
30
25
-7.5%
Source: DFP, Ulster Bank & Markit Economics,
PMI Index 50.0 denotes threshold between
expansion / contraction
-10.0%
20
2003 Q4
2005 Q4
2007 Q4
PMI Employment Index
2009 Q4
No Change
2011 Q4
2013 Q4
QES Q/Q

51. Construction output growth accelerates in the UK & RoI
over the last 3 months and remains strong in NI
Construction Sector Output - PMI
3 month moving average
PMI Index
UK
RoI
Expansion
NI
60
50
Contraction
40
30
Source: Markit Economics
20
Apr-09
Dec-09
Aug-10
Apr-11
Dec-11
Aug-12
Apr-13
Dec-13

52. New orders growth accelerating in all 3 economies
Construction Sector New Orders - PMI
3 month moving average
PMI Index
70
NI
UK
RoI
Expansion
60
Contraction
50
40
30
Source: Markit Economics
20
Apr-09
Dec-09
Aug-10
Apr-11
Dec-11
Aug-12
Apr-13
Dec-13

53. Opportunities for NI firms within GB market. House
building growth recently hit a 10-year high…
UK Construction Activity - PMIs
3 month moving average
70
Housing Activity
Commercial Activity
Civil Engineering Activity
Expansion
60
50
Contraction
40
30
Source: Markit Economics
20
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13

54. …with opportunities returning within the RoI too
Republic of Ireland Construction Activity - PMI
3 month moving average
70
Housing Activity
Commercial Activity
Engineering Activity
Expansion
60
50 = No change
50
Contraction
40
30
Source: Markit Economics & Ulster Bank
20
Apr-07
Aug-08
Dec-09
Apr-11
Aug-12
Dec-13

55. 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
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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
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information and disclaim all liability for use the recipient or their advisors make of the information.
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Slide 55