Ulster Bank Northern Ireland Purchasing Managers Index (PMI) Slide Pack - January 2017

Ulster Bank Northern Ireland Purchasing Managers Index (PMI)

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

January 2017 Survey Update Issued 13th February 2017

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 hits a 22-mth high• US composite PMI hits a 14-mth & China slips to a 4-mth low• EZ composite PMI (54.4) remains at highest level in >5½ yrs • Russian composite PMI hits an 8½-year high • Brazil (44.7) & India (49.4) composite PMIs signal contraction• Global input price inflation hits a 67-mth high• Developed Market manufacturing PMIs hits a 35-mth high

with Emerging Markets easing from a 29-mth highs• UK output growth eases due to services & construction • RoI business activity accelerates to a 10-mth high (59.3)• NI business activity eases to 54.2 from 58.7• NI & UK manufacturing input cost inflation hits record high • NI retailers also raising prices at a record rate

January 2017 PMIs – Key highlights

Global output growth rate accelerates to a 22-month high

US outperforms in January with composite hitting a 14-month high. China slips to a 4-month low

Developed Markets PMI hits a 14-month high while Emerging Markets rises to a 23-month high

Emerging Markets’ PMI remains in growth mode but divergence between Russia (8.5yr high) & India & Brazil

Chinese services & manufacturing PMIs ease from their recent highs

Strong growth ‘Down Under’ eases in January

Ireland & France report a marked acceleration in growth with the other economies posting a slowdown

All sectors of the Eurozone economy in expansion mode but retail only just!

GDP remained stuck in a low gear in Q2 & Q3 but PMI signals more momentum in Q4/Q1-17

Ireland, Russia & Australia top the service sector growth league with India & Brazil at the bottom

A pick-up in manufacturing activity is evident in the US, Japan & the Eurozone. Slowdown in China

Developed Markets manufacturing PMIs hits a 35-month high & diverging from Emerging Markets

NI & UK firms report a slowdown in private sector growth in January with RoI firms signalling a pick-up

PMI suggests private sector growth rebounded in Q4

2014 was the 1st year in 7 years that the 4 main indicators recorded expansion, repeated in 2015 & 2016

Output & orders rebound in Q4 but pace of job creation eases. Sterling weakness triggers surge in exports

NI firms report a slowdown in output, new orders & employment growth

RoI firms report a marked pick-up in new orders with NI & UK firms posting faster rates of growth too

RoI, UK & NI firms report rising backlogs

NI export orders ease from their record high with £ weakness still cited as a factor behind strong demand

RoI jobs growth accelerates with NI & UK firms reporting a slowdown in employment growth

Input cost inflation in Q4 hits its highest level since Q2-11. Output prices rise at their fastest rate since Q3-08

Regional Comparisons

The West Midlands topped the regional growth table in January with Scotland at the foot of the league table

Scotland, the North East & London post the weakest growth rates of 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

Scotland & the North East report the weakest rates of jobs growth with Wales & the North West the strongest

NI posts the 3rd slowest rate of employment growth of all UK regions over the last 3 months

The North East (job losses) was the only region not to post employment growth over the last 12 months

SectoralComparisons

UK manufacturers report a pick-up in output growth while construction & services signal a slowdown

The UK’s growth rate has remained constant at 0.6% q/q for the last 3 quarters firmer than PMI suggested

Construction was the only sector in the RoI to report a slowdown in the rate of growth in January

NI retailers, services & manufacturing firms in growth mode while construction remains broadly flat

Retail surging & construction contracting. Manufacturing & services continue to expand at robust rates of growth

Retail sector eases from a record high (67.8) with private sector (excl. retail) easing from December’s 26-mth high

All sectors of Northern Ireland’s private sector report an increase in staffing levels

NI’s manufacturing firms report an easing in the rate of growth across key indicators over the last 3 months

UK & RoI manufacturing output growth accelerates while growth moderates for NI firms

NI manufacturing output growth (3-month average) remains above its pre-downturn long-term average

UK firms report robust rates of growth with NI and RoI firms signalling a marked pick-up in demand too

NI manufacturing output growth eases with Greece contracting at its fastest rate in 16-months

NI & UK manufacturing firms reporting record rates of input cost inflation

Input cost inflation rockets from end of Q1-16 with firms raising prices at a record rate

NI’s manufacturing firms reporting a slowdown in jobs growth following a ‘V-shaped recovery’

All key indicators across NI’s services sector signal an upward trend

NI & RoI services sector output accelerates (3 month average) with UK output growth unchanged

The growth rate in NI’s services sector accelerates but remains below its pre-downturn long-term average

New orders growth up sharply for UK & RoI firms with NI more muted.

Input cost inflation accelerates with output prices increasing at a much weaker rate

NI & UK firms report similar rates of service sector jobs growth with RoI’s rate accelerating

NI retailers are still recruiting staff at a significant rate with sales & orders growth exceptionally strong

NI retailers increasing prices at a record rate as rising input costs get passed on to consumers

NI’s construction firms are hiring staff again as sustained period of contraction eases

Input cost inflation accelerating at a rapid rate with firms increasing prices at a much weaker rate

NI firms report a 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 & UK firms

UK firms report an improvement in conditions across housing, commercial & civil engineering activity

Slowdown in construction sector briefly led to an increase in supply of sub-contractors

Optimism amongst UK construction firms back above its long-term average

RoI housing & commercial activity remains strong while engineering output continues to fall

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

Slide 67

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) derivatives 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.