Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector

May 2016 Survey Update

Issued 13th June 2016

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 growth slows in May with manufacturing’s rate of expansion at a 42-month low

China & the US report a deterioration in their PMIs in May with UK & the EZ improving & Japan still contracting

Developed Markets’ PMI stuck in low growth mode while Emerging Markets stagnates

Emerging Markets’ PMI dips below 50.0 with Russia & India in low growth mode & Brazil’s recession continues

Chinese manufacturing and services PMIs both deteriorate in May

Services & manufacturing in low growth mode ‘Down Under’

France, Germany, the UK & Ireland all reported a pick-up in rates of growth with Italy & Spain slowing

EZ manufacturing output growth eases. Growth rates improve for retail & services. Construction still contracting

GDP picked up in Q1-16 but composite PMI signals that the Eurozone economy is stuck in a low gear in Q2

The RoI continues to post the fastest rate of output growth in services with Brazil contracting at a rapid rate

Manufacturing PMIs for China, the EZ and Japan deteriorate in May with the US (ISM) bucking the trend

Developed Markets still outperform Emerging Markets. The latter is below 50 for 13th time in 14 months

Denmark, Switzerland & New Zealand record the fastest rates of manufacturing growth. BRICS still struggling

UK & RoI firms report an improvement in output growth in May while NI firms report a marked slowdown

PMI suggests private sector growth stabilises in Q4-15, accelerates in Q1 2016 but eases in Q2*

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 but growth slowed

Output, orders & jobs growth eases in Q2* relative to Q1 with only exports growth accelerating

NI firms reported a marked slowdown in output & jobs growth with new orders growth flat

RoI firms are still reporting strong growth in new orders while NI & UK firms post a marked slowdown in growth

RoI firms still reporting rising backlogs while their UK & NI counterparts post declines

NI export orders rise for the 4th month in a row in May but only just

RoI jobs growth continues at a robust rate while NI and UK report a sharp slowdown in employment creation

Input cost inflation accelerates with output price inflation holding steady

Regional Comparisons

The East Midlands tops the regional growth table in May with Scotland stagnating and the North East contracting

All UK regions bar Scotland & the North East posted growth in 3 mths to May with NI in the top half of the table

The RoI reported the fastest growth rate in business activity over the last year with Scotland the slowest

Yorkshire & Humberside and Scotland post job losses with NI’s rate of job creation in line with the UK average

Yorkshire & Humberside, Scotland & the North East report job losses in 3 months to May. NI above the UK average

Scotland was the only region to post job losses over the last year with NI below the UK average

SectoralComparisons

Growth remains subdued across all sectors within the UK

The UK’s growth rate slowed in Q1 to 0.4% and is expected to slow further in Q2 based on PMI

Services was the only sector within the RoI to report a pick-up in activity in May with slowdowns elsewhere

NI retailers & services firms posted a marked pick-up in business activity in Q1-16 with growth easing in Q2*

Services sector’s robust rates of output growth now slowing with construction & manufacturing contracting

Rate of jobs growth eases within services & notably construction while manufacturing job losses continue

NI’s manufacturing firms report a marked pick-up in orders but fall in output & employment continues

NI manufacturing output in contraction mode with UK output growth slowing significantly

NI manufacturing output in contraction mode and well below pre-downturn long-term average

NI firms report a e pick-up in orders growth with RoIreporting a marked slowdown & UK modest growth

Manufacturing output contracts for NI, France & Greece with growth rates slowing elsewhere

Higher wage costs (NLW introduced) & energy costs push input cost inflation to a 22-month high

Slowdown in global manufacturing is hitting employment levels most notably within the UK & NI

NI services sector experiences a slowdown across all key indicators

NI’s services sector reports a slowdown in output growth but still outperforms the UK

The rate of growth in NI’s services sector falls back below its pre-downturn long-term average

NI firms report an easing in new orders growth after recent high as growth slows markedly amongst UK firms

Input cost inflation picks up with output price rises continuing albeit at a slightly weaker rate

NI & UK firms report an easing in the rate of service sector employment growth with RoI’s growth rate maintained

NI retailers are still reporting strong demand & jobs growth but sharp slowdown in orders suggests it won’t last

NI retailers report a marked pick-up in input cost inflation while output prices continue to fall

NI’s construction firms in contraction mode with employment growth flat

Input cost inflation eases with local firms enjoying a high degree of pricing power

Output growth for RoI firms eases with a more significant slowdown for UK firms & contraction amongst NI firms

NI firms post a contraction in new orders growth with a rapid slowdown within UK & continued growth within RoI

UK firms report a slowdown in the rate of growth across all sectors

UK sub-contractors remain in short-supply with rates charged still rising albeit at slower rates than in 2015

Optimism amongst UK construction firms has been falling lately and is below its long-term average

All aspects of RoI construction activity have reported a marked slowdown in their growth rates

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 and well above the long-term average

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