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Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector
October 2016 Survey Update
Issued 15th November 2016
Richard RamseyChief Economist Northern Ireland
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 hits an 11-month high
US Markit composite PMI posts its best reading of the year with improvements in other economies too
Developed & Emerging Markets’ PMIs improving with the latter at a 20-month high
Emerging Markets’ PMI remains in growth mode with India reporting a marked improvement in October
Chinese services & manufacturing PMIs both pick-up in October with manufacturing at a 2½-year high
Australia’s services & manufacturing PMIs both return to growth
Italy, France & Ireland signal a slowdown in their growth rates with UK, Germany & Spain posting a pick-up
EZ manufacturing & services output growth quickens. But retail & construction are both in contraction mode
GDP remained stuck in a low gear in Q2 & Q3 but PMI signals more momentum in Q4*
US overtakes Ireland to post the fastest rate of output growth in services with Brazil in a league of its own
All major economies report an improvement in manufacturing conditions
Developed Markets still outperform Emerging Markets
NI firms report a modest pick-up in output growth with the RoI economy slowing fast & overtaken by the UK
PMI suggests private sector growth stalls in Q3 but recovers in Q4*
2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 & 2016*
Output & orders fall in Q3* with pace of job creation easing. £ weakness boosts growth in exports in Q3 / Q4*
NI firms report a return to growth in output but new orders growth stagnant & jobs growth slowing
UK firms report a marked pick-up in new orders growth while RoI growth slows and NI order books remain flat
RoI firms report rising backlogs while UK & NI firms post stagnation and declines respectively
NI export orders rise at a near record rate with £ weakness cited as a factor behind growth in RoI demand
RoI jobs growth accelerates while NI and UK report lower rates of employment creation
Input cost inflation accelerates to a 65-month high in October with output price inflation less marked
Regional Comparisons
The North West tops the regional growth table in October with Scotland at the foot of the regional league table
Scotland, NI & the North East post the weakest growth rates of all the UK regions over the last 3 months
The RoI reported the fastest growth rate in business activity over the last year with Scotland stagnating
NI reports the 3rd slowest rate of job creation in the UK with London reporting no change in staffing levels
NI posts the 3rd fastest rate of employment growth of all UK regions over the last 3 months
Scotland & the North East (job losses) were the only 2 regions not to post growth over the last 12 months
SectoralComparisons
Post-Brexit vote pessimism appears to have been and gone but will it return?
The UK’s growth rate remained relatively strong in Q3 at 0.5% q/q which was firmer than PMI suggested
Services was the only sector in the RoI to report a slowdown in growth
NI retailers & manufacturing firms in growth mode in Q4* while services weak & construction in rapid decline
Services sector’s output growth stagnates with construction contracting & manufacturing recovering
Divergence: the rate of job losses accelerates for construction with manufacturing & services expanding
NI’s manufacturing firms report a marked pick-up in activity but new orders and employment flat
UK manufacturing output growth accelerates markedly with both UK & NI outperforming the RoI
NI manufacturing output growth just below pre-downturn long-term average
UK businesses reporting a marked pick-up in demand but NI manufacturing orders’ growth is flat
NI manufacturing firms bucking the wider trend of slower growth within the Eurozone
Input cost inflation rockets to a 99-month high in October with firms raising prices at a weaker rate
NI’s manufacturing firms reporting a ‘V-shaped recovery’ in employment growth & outperforming the UK & RoI
All key indicators across NI’s services sector point to low growth / stagnation
UK services sector output rebounds in the UK but slows markedly in the RoI. NI output remains broadly flat
The rate of growth in NI’s services sector is broadly flat and well below its pre-downturn long-term average
New orders dry up for NI but UK firms report a marked pick-up. RoI firms reporting a slowdown in growth
Input cost inflation accelerates to a 33-month high with output prices increasing at a much weaker rate
NI & UK firms report muted rates of service sector jobs growth with RoI’s rate still strong albeit slowing
NI retailers are still recruiting staff at a significant rate with sales and orders growth accelerating
NI retailers report a marked acceleration in input cost inflation while output price rises pick-up too
NI’s construction firms posting a contraction in all key indicators
Input cost inflation accelerating at a rapid rate with firms increasing prices at a much weaker rate
NI firms report a sharp decline in output over the last 3 months in contrast to growth amongst UK & RoI firms
NI firms continue to post a slump in new orders growth in contrast to robust growth amongst RoI firms
UK firms report an improvement in conditions across housing and civil engineering activity
Slowdown in construction sector briefly led to an increase in supply of sub-contractors
Optimism amongst UK construction firms remains below its long-term average
RoI housing and commercial construction activity has been improving while engineering output stagnates
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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