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 2015 Survey Update

Issued 14th December 2015

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 rebounds to a 3-month high with improvements in manufacturing & services

Composite PMIs for the US (Markit PMI not ISM), China, the Eurozone and the UK all improved in November

Developed Markets continue to outperform Emerging Markets

Emerging Markets PMI back above 50 but only just. India, which has escaped the slowdown thus far, wilts in November

Chinese Composite PMI back above 50 for the first time in 4 months

Australia’s services sector hits an 11-month low while manufacturing reaches a 25-month high

All economies bar France posted better composite PMIs in November relative to October

EZ manufacturing & services sector growth rates increase but retail sales & construction activity still contracting

The Eurozone composite PMI signals a loss of momentum in Q3 but some improvement in Q4

The Republic of Ireland, Spain, the US & UK posted the fastest rates of service sector output growth in November

Manufacturing activity picked-up in Japan & the EZ but the US ISM joined the Chinese PMI in contraction territory

Developed Markets continue to outperform Emerging Markets in terms of manufacturing

UK manufacturing output growth still ranks higher than most with RoI mid-table and NI struggling at the bottom

UK, NI and RoI firms all report a pick-up in their respective rates of business growth in November

PMI suggests growth in DFP’s private sector composite index during 2014 but recovery stalls in Q1-15 with a modest rebound in Q2 to Q4

2014 was the first year in 7 years that business activity, new orders, employment & export orders all expanded

Output & new orders growth slow in Q4* relative to Q3 but export & employment growth accelerates

NI firms post a pick-up in the pace of job creation, new orders growth and business activity

RoI & NI firms report a slowdown in new orders growth (albeit RoI growth rate remains very strong). UK posts a pick-up

Backlogs of work continue to grow amongst RoI firms with levels of outstanding work for NI & UK firms falling

Export orders flat in November following a period of growth

RoI & NI firms report a pick-up in the rates of job creation with NI firms hiring at their fastest rate in 14 months

PMI signalled a slowdown in jobs growth in H2-14 but employment growth has accelerated since then

Inflationary pressures remain relatively subdued and output prices are falling again

Regional Comparisons

All UK regions bar Scotland post output growth in November

All UK regions bar Scotland posted growth in the 3 months to November with NI lagging behind the UK

The RoI reported the fastest rate of growth in business activity over the last 12 months & Scotland & NI the slowest

North East, Scotland & the North West post the weakest rates of job creation within the UK in November

Scotland and the North East post the weakest rates of job creation within the UK over the last 3 months

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

SectoralComparisons

UK services firms reported a pick-up in output growth but manufacturing & construction reported slower growth

The UK’s growth rate in Q3 moderated in line with the PMI to 0.5% q/q. A similar growth rate is expected in Q4

Output growth within manufacturing & services picks up in November while growth slows in construction sector

Retail & construction posted stronger rates of growth in H2* than H1 while services held steady & manufacturing slowed

NI manufacturing output slowing fast with services & construction in particular posting a pick-up in output growth

Jobs growth within the services & construction sectors accelerates while manufacturing industry is losing jobs

NI’s manufacturing firms have experienced a marked slowdown since mid-2015. Contraction in 2016?

RoI firms post a sharp slowdown in output growth with NI now signalling contraction. UK firms bucking the trend

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

All economies bar France & NI saw their PMIs improve in November. NI & Greece in contraction mode

Input cost inflation for manufacturers remains subdued with output price deflation accelerating

NI manufacturing firms now reporting job losses at their fastest pace in 2½ years. UK & RoI are still creating jobs

NI PMI signals moderation in jobs growth in H2-14 & Q1-15 following record high in Q2-14. Job losses apparent in Q4

NI services sector experiences a pick-up in output, orders and employment growth in November

All three economies report a pick up in the rate of growth in services output in November

The rate of growth in NI’s services sector is well below the pre-downturn long-term average

RoI firms still report very strong rates of new orders growth whilst growth amongst NI & UK firms lags behind

Input cost inflation remains relatively strong for services firms but a degree of pricing power remains

All three economies report an acceleration in the rate of employment growth in the three months to November

Pace of job creation within services sector eased in H2-14 but has picked up and accelerated throughout 2015

NI retailers report a significant moderation in sales growth with job creation easing too & orders falling

NI retailers report output price deflation with output prices recently falling at their fastest rate since June 2009

NI’s construction firms reporting rising rates of output, new orders & employment growth

Input cost inflation remains subdued as local firms continue to enjoy pricing power

NI’s construction PMI posts jobs growth Q3-13 to Q4-15 with a dip in employment in Q3-15

UK & RoI firms reporting strong rates of output growth but growth rate is slowing. NI firms catching up

New orders growth remains steady in the UK & RoI with NI firms reporting a marked acceleration in new orders growth

UK firms post robust rates of growth in housing & commercial activity with civil engineering lagging behind

UK sub-contractors remain in short-supply with rates charged still rising

Optimism amongst UK construction firms remains high

Construction activity linked to civil engineering & housing eases in November with commercial activity improving

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

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