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Latest quarterly output indices for the Northern Ireland economy

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Richard Ramsey

The Northern Ireland private sector output indices for Q3 2012 show a slight quarterly growth of 0.8%, with a year-on-year increase of 0.1%, although still 15.2% below the pre-recession peak. Key sectors such as other services, chemicals, and pharmaceuticals exhibit significant growth, while construction continues to struggle with declines. Overall, the report highlights persistent challenges in recovery for many sectors, particularly construction, which has not recovered to pre-recession levels.

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Northern Ireland Private Sector Output Indices Q3 2012 Update Issued 25th January 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
Summary Table – NI Private Sector Output Northern Ireland Private Sector Output Private Sector  Index of Services  Index of  Index of  PMI Index Output Index (excludes public sector) Production Construction* 2006 Q1 108.5 105.8 107.5 119.8 54.3 Q2 109.9 107.8 110.3 116.8 56.7 Q3 113.2 111.6 111.1 123.3 54.4 Q4 113.4 111.3 111.7 124.2 57.9 2007 Q1 111.9 107.9 114.0 124.5 58.2 Q2 113.8 111.0 114.5 124.4 55.9 Q3 113.4 110.2 117.2 119.1 57.9 Q4 111.9 107.7 118.6 116.0 52.5 2008 Q1 108.3 106.2 119.5 111.6 47.9 Q2 108.4 104.9 120.6 115.1 45.0 Q3 105.2 103.2 117.0 106.4 37.3 Q4 101.9 101.2 109.6 104.9 33.2 2009 Q1 102.0 102.0 102.5 101.8 34.0 Q2 99.6 100.1 98.3 101.0 40.8 Q3 98.8 98.8 99.0 99.4 46.2 Q4 99.2 99.1 100.2 98.0 49.3 2010 Q1 99.2 100.5 100.1 91.9 44.5 Q2 98.5 99.8 100.1 90.5 46.3 Q3 97.9 97.7 102.4 90.2 44.9 Q4 97.0 96.1 105.4 84.7 42.2 2011 Q1 96.5 94.9 107.6 81.4 47.0 Q2 96.6 98.1 103.0 76.8 46.2 Q3 96.5 94.6 109.8 77.6 43.7 Q4 97.4 96.3 109.2 78.2 48.0 2012 Q1 97.9 96.0 109.9 82.1 43.9 Q2 95.8 96.5 104.3 75.4 43.3 Q3 96.6 98.4 104.2 71.8 44.8 Q4 … … … … 44.8 Latest Quarter Q/Q % Change 0.8% 2.0% ‐0.1% ‐4.8% N.A Latest Quarter Y/Y % Change 0.1% 4.0% ‐5.1% ‐7.5% N.A Last 4 quarters Y/Y % Change 0.3% 0.9% 0.4% ‐4.1% N.A Q3 2012 % Change relative to peak ‐15.2% (Q2 07) ‐11.8% (Q3 06) ‐13.6% (Q2 08) ‐42.3% (Q1 07) N.A Source: DFP indices of production, construction (*rebased 2009=100) and services; Ulster Bank Private Sector Output Composite index & Ulster Bank PMI. 
‘Winners’ during the downturn… Change in NI Private Sector Output Q2 2007 ‐ Q3 2012 Industrial Group % Change Recession Winners ↑↑↑ Other Services 50.0% Chemicals & Pharmaceutical Products  26.8% Utilities (Electricity & Gas) 10.1% Transport, Storage & Communications 7.3% Food, Drink & Tobacco 5.8% Wholesale & Retail Distribution, Accommodation & Food Service 1.2% Agriculture (Gross annual output in real terms 2007‐11) 0.5% Source: DFP Indices of Production, Services and Construction, DARD & Ulster Bank calculations Slide 3
….outnumbered by ‘losers’ & ‘big losers’ Change in NI Private Sector Output Q2 2007 ‐ Q3 2012 Industrial Group % Change Recession Losers    ↓↓↓ Utilities (Water Supply & Waste Management) ‐1.4% Engineering & Allied Industries ‐6.5% All Production Industries ‐9.0% All Manufacturing ‐11.4% All Private Sector Services ‐11.4% Total Private Sector Output (Construction + Production + Private Services) ‐15.2% Recession Big Losers    ↓↓↓ Basic Metals & Fabricated Metal Products ‐23.4% Textiles & Textile Products ‐23.7% Total Other Manufacturing ‐32.7% Mining & Quarrying ‐33.3% Construction / Wood & Paper Products ‐35.1% Construction / property related Rubber, Plastics & non‐metal Products ‐41.1% property Construction ‐42.2% related Business Services & Finance ‐48.2% Source: DFP Indices of Production, Services and Construction, DARD & Ulster Bank calculations Slide 4
Quarter-on-Quarter Risers & Fallers Quarterly Change in Private Sector Output Q2 2012 ‐ Q3 2012 Industrial Group NI UK Quarter‐on‐Quarter Risers ↑↑↑ Food, Drink & Tobacco 4.4% 0.3% Wholesale & Retail Distribution, Accommodation & Food Service 4.0% 1.9% Chemicals & Pharmaceutical Products  3.9% 0.1% Business Services & Finance 2.9% 0.9% Transport, Storage & Communications 2.4% 0.2% All Private Sector Services 2.0% 1.2% Utilities (Electricity & Gas) 1.4% ‐2.3% Total Private Sector Output (Construction + Production + Private Services) 0.8% N.A Quarter‐on‐Quarter Fallers ↓↓↓ All Production Industries ‐0.1% 0.7% All Manufacturing ‐0.3% 0.7% Other Services ‐0.5% 1.6% Engineering & Allied Industries ‐1.1% 1.6% Textiles & Textile Products ‐2.2% ‐2.3% Total Other Manufacturing ‐2.7% 0.3% Utilities (Water Supply & Waste Management) ‐3.4% 2.5% Mining & Quarrying ‐3.7% 2.0% Wood & Paper Products ‐4.0% ‐0.3% Rubber, Plastics & non‐metal Products ‐4.4% ‐0.4% Construction ‐4.7% ‐2.6% Basic Metals & Fabricated Metal Products ‐8.7% 3.3% Source: ONS, DFP Indices of Production, Services and Construction & Ulster Bank calculations Slide 5
Year-on-Year Risers & Fallers Annual Change in Private Sector Output Q3 2011 ‐ Q3 2012 Industrial Group NI UK Year‐on‐Year Risers ↑↑↑ Chemicals & Pharmaceutical Products  16.8% ‐7.0% Other Services 8.6% 2.8% Wholesale & Retail Distribution, Accommodation & Food Service 7.1% 1.5% All Private Sector Services 4.0% 1.2% Wood & Paper Products 1.5% ‐7.9% Total Private Sector Output (Construction + Production + Private Services) 0.1% N.A Year‐on‐Year Fallers ↓↓↓ Utilities (Electricity & Gas) ‐0.6% ‐1.1% Business Services & Finance ‐1.0% 1.0% Transport, Storage & Communications ‐1.2% ‐1.5% Engineering & Allied Industries ‐3.6% 5.0% Mining & Quarrying ‐3.9% ‐6.4% Food, Drink & Tobacco ‐4.1% ‐2.1% All Production Industries ‐5.1% ‐1.8% Utilities (Water Supply & Waste Management) ‐5.5% 1.3% All Manufacturing ‐5.6% ‐1.5% Basic Metals & Fabricated Metal Products ‐6.7% 3.0% Construction ‐7.5% ‐11.3% Textiles & Textile Products ‐11.6% ‐3.8% Total Other Manufacturing ‐12.0% ‐5.9% Rubber, Plastics & non‐metal Products ‐16.7% ‐6.9% Source: ONS, DFP Indices of Production, Services and Construction & Ulster Bank calculations Slide 6
Private Sector Output Compiles official Indices of Construction, Production & Private Sector Services into a single composite index
Q3 posts rebound after Q2 marked the steepest quarterly decline in private sector output since Q2 2009 NI Private Sector Output Levels & Growth Q/Q Growth Index 2009 = 100 6% 120 Q/Q Left Hand Scale PSO Right Hand Scale 5% 115 4% 110 3% 2% 105 1% 100 0% 95 -1% 90 -2% -3% 85 Source: Ulster Bank Private Sector Output Index, 2009 = 100 -4% 80 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
The PMI signalled a contraction in Q3 2012 whereas the Private Sector Output index posts a rise NI Private Sector Output Index Versus NI PMI PSO Q/Q% PMI UB PSO Left Hand Scale UB PMI Right Hand Scale 5 65 50 mark is the threshold for expansion / contraction with PMI 4 60 3 Expansion 2 55 1 50 0 45 -1 -2 40 -3 Contraction 35 -4 Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics -5 30 2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4
Remember its levels of output not growth rates that are important - private sector output still at 2003 levels NI Private Sector Output Levels Composite of construction, production and services sectors PSO Index **Excludes Agriculture** 120 115 110 15.2% below peak & at 2003 levels 105 100 95 15.8% 90 fall 85 80 Source: Ulster Bank Private Sector Output Index (2009=100), using DFP output indices & ABI weights 75 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3 Slide 10
Strong growth in services more than compensates for steep fall in construction output in Q3 2012 NI Private Sector Output Growth Q/Q Quarterly 8% Services Production Construction Total 6% 4% 2% 0% -2% -4% -6% -8% Source: Ulster Bank Private Sector Output Index and DFP -10% 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Private sector services is the only sector posting year- on-year growth in Q3 2012 Y/Y NI Private Sector Output Growth Y/Y 15% Services Production Construction Total 10% 5% 0% -5% -10% -15% Source: Ulster Bank Private Sector Output Index and DFP -20% 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Services & total private sector output post first annual growth since 2007 NI Private Sector Output Growth Y/Y Annual 10% Services Production Construction Total 5% 0% -5% -10% Source: Ulster Bank Private Sector Output Index & DFP, * based on 4 quarters to Q3 2012 -15% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
Industrial sector was last sector to go into downturn & the first industry to come out of it. But IP recovery has stuttered NI Private Sector Output Levels Index Q2 2007 = 100 Index Services Industrial Production Construction Total 110 Q2 2007 Peak Level of Total Private Sector Output 100 90 80 70 60 Source: Ulster Bank PSO Index & DFP 50 2007 Q2 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
Services sector output has now been below its pre- downturn peak for 24 quarters or 6 years NI Private Sector Output Relative to Pre-Recession Peaks As of Q3 2012 (Peak = 0) 10% Total Private Sector Output Private Sector Services Industrial Production Construction 0% -11.8% -10% -13.3% -15.1% -20% -30% -40% -42.3% -50% 0 2 4 6 8 10 12 14 16 18 20 22 24 Time in Quarters Since Pre-Recession Output Peak
Construction remains the only sector that has experienced no recovery in output whatsoever % NI's Private Sector Output 20% Peak to Trough Recovery from Trough Q3 2012 Relative to Peak 10% 0% -10% -20% Peak Q2 2008 Peak Q3 2006 Peak Q2 2007 Peak Q2 2008 -30% -40% Peak Q1 2007 Source: DFP & UB PSO Index -50% Industrial Manufacturing Construction Services Private Sector Production
Northern Ireland will not be returning to 2007 peak anytime soon – 2021 if trend rate of growth is halved PSO Index NI Private Sector Output Levels 150 Based on heroic assumption of pre- 140 recession growth (public expenditure, Had pre-recession property, retail, Celtic Tiger booms growth rate continued 130 Q2 2017 return to pre-recession peak 42% 120 gap 110 100 Return to 2007 Q2 peak output 90 2021 Q4 Source: Ulster Bank Private Sector Output Index, Index 2009 = 100 80 2001 Q4 2004 Q2 2006 Q4 2009 Q2 2011 Q4 2014 Q2 2016 Q4 2019 Q2 2021 Q4 No Credit Crunch / Recession Pre-crisis growth rate returns Trend rate of growth halved
Private Sector Services Output
Summary Table - Private Sector Services Output NI & UK Private Service Sector Output  Q/Q Change       Y/Y Change        Change since peak*  Service Sector Category Q3 2012 Q3 2012  2006 Q3 ‐ 2012 Q3 NI UK NI UK NI UK Wholesale, Retail, Repair, Accommodation & Food  4.0% 1.9% 7.1% 1.5% 2.4% 2.4% Service Transport, Storage, Information & Communication 2.4% 0.2% ‐1.2% ‐1.5% 12.5% 2.2% Other Services** ‐0.5% 1.6% 8.6% 2.8% 40.4% 9.2% Business Services & Finance 2.9% 0.9% ‐1.0% 1.0% ‐49.2% 8.2% Total Services 2.0% 1.2% 4.0% 1.2% ‐11.8% 6.5% Source: ONS & DFP Index of Services, * NI peak was Q3 2006 whereas UK peak was Q4 2007, **NI & UK have a  different  coverage
Private sector services output rises (albeit from a low base) for the 2nd consecutive quarter in Q3 2012 NI Private Sector Services Output Levels & Growth Q/Q Growth Index 2009 = 100 Q/Q % LHS Index RHS 8% 120 Source: DFP Index of Services (Index 2009 )= 100 115 6% 110 4% 105 100 2% 95 0% 90 85 -2% 80 -4% 75 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
Three service sub-sectors experiencing higher levels of output in Q3 2012 relative to pre-downturn peak NI Private Sector Services Output Levels Index 2006 Q3 = 100 relative to 2006 Q3 private service sector peak +39.3% 140 Source: DFP Index of Services 130 Sectors gaining during downturn 120 +12.6% 110 +2.4% 100 90 Sectors losing during downturn -11.8% 80 70 All Services 60 Wholesale, Retail, Accommodation & Food Service Transport, Storage, Information & Communication 50 Business Services & Finance Other -49.2% 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
UK services output is now back above its pre-downturn peak. NI remains almost 12% below its pre-downturn high Private Sector Services Output Levels Index 2009 = 100 120 NI UK above pre- 115 recession peak below peak 110 105 100 95 Back to late 2004 levels 90 11.8% below peak 85 Source: DFP & ONS Index of Services 80 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
NI’s Business Services & Finance output remains almost 50% below its Q3 2006 high Business Services & Finance Output Levels Index 2009 = 100 150 NI UK 140 1.1% 130 off peak 120 110 100 90 80 49% below 70 peak 60 Source: DFP Index of Services, ONS 50 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
NI’s Distribution, Accommodation & Food Services output back above pre-downturn peak. Hotel occupancy rates at record highs Distribution, Accommodation & Food Services Output Index 2009 = 100 (includes Retail, Hotels & Restaurants, Car Sales) 115 1.2% above pre- 110 recession peak 105 100 95 £ depreciation increased South >North trade £ appreciating versus euro reduces 90 South > North trade + severe winter Q4 10 & Q1 2011 85 Source: DFP & ONS Index of Services NI UK 80 2003 Q3 2005 Q4 2008 Q1 2010 Q2 2012 Q3
The strength of the rebound in this consumer sensitive sector appears odd but has been boosted by tourism industry NI Distribution, Accommodation & Food Services Q/Q Growth Index 2009 = 100 Q/Q % LHS Index RHS 8% 2007 Q2 110 6% 105 4% 100 2% 95 0% 90 -2% 85 -4% -6% 80 Source: DFP Index of Services (Index 2009 )= 100 -8% 75 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
Some NI service sectors have benefited from an uplift in external trade Transport, Storage, Information & Communication Index 2009 = 100 Output Levels 120 NI series high NI UK 110 100 90 80 Source: DFP & ONS Index of Services 70 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
Industrial Production Output
Summary Table – NI & UK Industrial Output NI & UK Industrial Output  Q/Q Change       Y/Y Change        Change since peak*  Industrial Production Category (NI Weights in brackets) Q3 2012 Q3 2012  2008 Q2 ‐ 2012 Q3 NI UK NI UK NI UK Manufacturing (weight 85.0%) ‐0.3% 0.7% ‐5.6% ‐1.5% ‐16.2% ‐7.1% Electricity, Gas, Steam & Air Conditioning Supply  1.4% ‐2.3% ‐0.6% ‐1.1% ‐2.7% ‐7.5% (weight 5.1%) Water Supply,Sewerage & Waste Management  ‐3.4% 2.5% ‐5.5% 1.3% ‐1.9% ‐4.4% (weight 7.6%) Mining & Quarrying (weight 2.3%) ‐3.7% 2.0% ‐3.9% ‐6.4% ‐24.8% ‐32.8% Total Production ‐0.1% 0.7% ‐5.1% ‐1.8% ‐13.6% ‐10.8% Source: ONS & DFP Index of Production, *peak referred to is NI industrial output peak not the UK's which was 2008 Q1
NI has recovered just over one quarter of the industrial output lost during the recession (UK has recorded 0%) NI & UK Industrial Output Levels Index 2008 relative to NI's peak in Industrial Output 2008 Q2 Q2 = 100 105 2008 Q2 Industrial Production 100 O t tL l 95 90 18% 85 fall 13.6% below peak 80 75 Source: DFP, ONS NI UK 70 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
In Q3 2012 NI manufacturing posts its third quarterly fall in four quarters NI Manufacturing Output Levels & Growth Q/Q Growth Index 2009 = 100 8% 140 Q/Q % Left Hand Axis Index Right Hand Axis 6% Q2 2008 130 4% 2% 120 0% 110 -2% -4% 100 -6% 90 -8% Source: DFP Index of Manufacturing (Index 2009 )= 100 -10% 80 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
NI manufacturing has recouped just over 1/4 of the output lost during the recession (UK over 1/3rd) NI & UK Manufacturing Output Levels Index 2008 relative to NI's Manufacturing Peak Q2 2008 Q2 = 100 NI UK 105 2008 Q2 Manufacturing Output 100 L l -7.1% 95 90 23% 85 fall 80 16.2% below 75 peak Source: DFP, ONS 70 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
Manufacturing output falling in line with PMI in Q3 2012 NI Manufacturing Output PMI Index Index of Manufacturing versus Manufacturing PMI IoM Q/Q 65 PMI LHS IoM Q/Q RHS 6% 60 55 3% 50 0% 45 40 -3% 35 -6% 30 Source: DFP, Markit Economics & Ulster Bank PMI 25 -9% 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
Summary Table - Manufacturing Output by Sub-sector NI & UK Manufacturing Output by Sub‐sector Q/Q Change       Y/Y Change        Change since peak*  Manufacturing Category (NI Weights in brackets) Q3 2012 Q3 2012  2008 Q2 ‐ 2012 Q3 NI UK NI UK NI UK Engineering & Allied Industries (weight 24.4%) ‐1.1% 1.6% ‐3.6% 5.0% ‐16.8% 5.5% Total Other Manufacturing  (weight 23.3%) ‐2.7% 0.3% ‐12.0% ‐5.9% ‐31.5% ‐17.5% Basic & Fabricated Metal Products  (weight 14.5%) ‐8.7% 3.3% ‐6.7% 3.0% ‐31.9% ‐13.3% Food Products, Beverages & Tobacco (weight 14.1%) 4.4% 0.3% ‐4.1% ‐2.1% ‐0.1% 5.7% Rubber, Plastics & Non‐metallic Mineral Products  ‐4.4% ‐0.4% ‐16.7% ‐6.9% ‐38.5% ‐21.3% (weight 8.9%) Chemical & Pharmaceutical Products (weight 5.3%) 3.9% 0.1% 16.8% ‐7.0% 22.1% ‐21.1% Textiles, Leather & Related Products (weight 3.4%) ‐2.2% ‐2.3% ‐11.6% ‐3.8% ‐7.5% ‐10.4% Total Manufacturing ‐0.3% 0.7% ‐5.6% ‐1.5% ‐16.2% ‐7.1% Source: ONS & DFP Index of Production, *peak referred to is NI industrial output peak not the UK's which was 2008 Q1
Still only 1 sector posted higher output levels in 2012 Q3 relative to the pre-downturn manufacturing peak Northern Ireland Manufacturing Output Levels Index 2008 relative to 2008 Q2 Manufacturing Output Peak Q2 = 100 130 Chemicals +22% Sectors gaining 120 during recession 110 Food & Drink 0% 100 Textiles & -8% 90 Engineering -17% 80 Wood & Paper -32% 70 Metals -32% Other -32% 60 Sectors losing Rubber & 50 during recession Plastics -38% 40 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
Those sectors exposed to construction industry (NI, UK & RoI) remain the furthest below their pre-recession peaks NI Manufacturing Output Q3 2012 Relative to 2008 Q2 Peak 30% Exposed to construction sector 20% 10% 0% -10% -20% -16.2% -30% Source: DFP -40% s g g ts ts s o g er ile tic in rin cc rin uc uc ap er xt as ba tu tu od od &P ne Te ac ac Pl To Pr Pr gi uf uf d r& En & oo al al an an ic et be k W lM M rin m M ub he er ,D Al R th C od O Fo
UK engineering output is now 3% higher than it was before the downturn whereas NI’s is still 17% lower Engineering Output as of Q3 2012 (% Change in Output since pre-recession peak: UK Peak Q1 2008, NI Q2 2008) 20% NI UK UK output now 3% higher than the pre-downturn peak 10% 0% -10% -17% below peak -20% -30% 36% rise -40% Seagate Limavady Plant Source: DFP, ONS & UB Calculations closes 25 September 2008 -50% Peak 0 2 4 6 8 10 12 14 16 18 Quarters After Pre-Recession Output Peak
Within engineering, the Transport Equipment sector is now 9% below its pre-recession peak NI Engineering Output Levels relative to 2008 Q2 Manufacturing Peak Index Q2 2008 = 100 120 Sectors gaining Transport Equipment during recession e.g. Bombardier, 110 Wrightbus -9% 100 Computer, Electronic, 90 Electrical & Optical Equipment e.g. Seagate 80 -19% 70 60 Sectors losing Machinery & Equipment 50 during recession e.g. FG Wilson / Caterpillar -30% 40 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
Biggest fallers within manufacturing….. Peak to Trough Fall in Output relative to 2008 Q2 peak Food, Drink & Tobacco Chemicals & Chemical Products Textiles Manufacturing Total Other Manufacturing Wood &Paper Products Basic & Fabricated Metal Products Rubber & Plastics Engineering Computer, Electronic, Electrical & Optical Equipment Transport Equipment Machinery & Equipment -60% -50% -40% -30% -20% -10% 0%
…have become biggest gainers from global recovery Recovery in NI Manufacturing Output Since Trough as of 2012 Q3 Transport Equipment Engineering Machinery & Equipment Computer, Electronic, Electrical & Optical Equipment Chemicals & Chemical Products Exposed to global markets Textiles Manufacturing Food, Drink & Tobacco Basic & Fabricated Metal Products Exposed to construction sector Wood &Paper Products (excl. FDT) Rubber & Plastics Total Other Manufacturing Source: DFP 0% 10% 20% 30% 40% 50% 60%
Construction Output
Summary Table - Construction Output NI & GB Construction Output   Change since NI  Quarterly Change   Year‐on‐Year  construction peak     Construction Sub‐Sector Category Q3 2012  Change Q3 2012 Q1 2007 ‐ Q3 2012 NI GB NI GB NI GB Housing 0.0% ‐3.3% ‐12.1% ‐12.5% ‐61.7% ‐33.4% Infrastructure 3.5% N.A 1.0% N.A 12.4% N.A Repair & Maintenance ‐0.6% ‐0.9% ‐5.2% 0.1% 7.9% ‐8.3% Other (e.g. commercial & industrial ) ‐9.2% ‐5.3% ‐8.7% ‐16.4% ‐31.6% ‐20.5% New Work ‐6.6% ‐8.7% ‐8.1% ‐7.6% ‐51.3% ‐11.9% Total Construction ‐4.7% ‐2.6% ‐7.5% ‐11.3% ‐42.3% ‐17.6% Source: DFP Construction Bulletin & ONS, ONS presents data as Great Britain (GB) not UK
NI’s construction sector still contracting 22 quarters after its pre-downturn high NI Construction Output Levels & Growth Q/Q Growth Index 2005 = 100 8% 140 Q/Q % LHS Index RHS 6% 130 4% 120 2% 2007 Q1 110 0% 100 -2% 90 -4% -6% 80 -8% 70 Source: DFP Index of Construction (Index 2009 )= 100 -10% 60 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
NI’s construction sector posted another steep quarterly fall in output in Q3 2012 Construction Output Q/Q Quarterly Growth 9% Annual Growth Source: DFP & ONS NI GB 2009 -8.5% -13.3% 6% 2010 -10.7% +8.0% 2011 -12.1% +2.6% 2012* -4.0% -6.1% *4 quarters to Q3 2012 3% 0% -3% -6% GB NI -9% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
… and NI’s output in Q3 2012 is now some 42% below its Q1 2007 peak Levels of Construction Output Relative to NI's Peak (Q1 2007) Index 2005=100 NI GB GB 18.5% below its 105 peak 95 85 NI 42% Annual Growth 75 NI GB below peak 2009 -8.5% -13.3% 2010 -10.7% +8.0% 65 2011 -12.1% +2.6% 2012* -4.0% -6.1% *4 quarters to Q3 2012 Source: DFP & ONS Index of Construction 55 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1
NI’s construction downturn would have been worse without public spending (Infrastructure and Repair & Maintenance) NI Construction Output Levels Relative to 2007 Peak (Index 2007 Q1 =100) Index Housing Infrastructure R&M New Work Other 150 125 +12% +8% 100 75 -38% -51% 50 Source: DFP -62% 25 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
GB construction sector recovery has faltered in 2012 after growth in 2010 & 2011 NI & GB Construction Output Y/Y Year-on-Year Growth 15% Annual Growth Source: DFP & ONS NI GB 2009 -8.5% -13.3% 10% 2010 -10.7% +8.0% 2011 -12.1% +2.6% 2012* -4.0% -6.1% 5% *4 quarters to Q3 2012 0% -5% -10% -15% GB NI -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Infrastructure the only sub-sector to post growth in Q3 2012 NI Construction Output by Sub-Sector Q/Q Quarterly Growth Rates 35% Housing Infrastructure Other 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Source: DFP Construction Bulletin -30% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Housing & ‘Other’ output are still falling year-on-year NI Construction Output by Sub-Sector Y/Y Year-on-Year growth 60% Housing Infrastructure Other 45% 30% 15% 0% -15% -30% Source: DFP Construction Bulletin -45% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Forward looking indicators (New Work) highlight that a meaningful construction recovery is not imminent Levels of New Work Construction Output Index Q1 Relative to NI's Peak (Q1 2007) 2007=100 110 GB 15.5% NI GB below its peak 100 90 80 NI 51% below 70 peak Annual Growth NI GB 60 2009 -10.2% -14.2% 2010 -13.1% -0.6% 2011 -16.9% +12.3% 50 2012* -5.8% -1.2% *4 quarters to Q3 2012 Source: DFP & ONS Index of Construction 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
NI posts much steeper decline in ‘Other construction’ (commercial & retail) than GB Rebased 2006 Levels of 'Other Construction' Output Q4=100 Relative to NI's Peak (Q4 2006) 120 NI GB GB 29% below its 110 peak 100 90 80 Annual Growth NI GB 70 2008 -3.6% -0.3% 2009 -16.3% -16.9% 60 2010 -9.0% 8.6% 2011 -3.8% -1.3% NI 40% 2012* -6.7% -9.8% below 50 * 4 Quarters to Q3 2012 peak Source: DFP & ONS Index of Construction 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
GB housing output posts 5th successive quarterly decline. NI housing output flat after 10 quarters of decline in 11 quarters Housing Output Quarterly Growth Q/Q 15% NI GB 10% 5% 0% -5% -10% -15% Source: DFP & ONS -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Annual rate of GB housing output now contracting again which is bad news for NI firms in this market Housing Output Y/Y Y/Y Growth NI GB 40% Annual Growth NI GB 30% 2008 -23.5% -21.0% 2009 -6.8% -25.0% 20% 2010 -7.0% 24.8% 2011 -22.9% +8.2% 2012* -14.4% -6.7% 10% *4 quarters to Q3 2012 0% -10% -20% -30% Source: DFP & ONS -40% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
‘Other construction’ output within NI & GB has followed a similar growth trajectory until recently Other Construction Output Y/Y Y/Y Growth NI GB 25% Annual Growth NI GB 20% 2008 -3.6% -0.3% 2009 -16.3% -16.9% 15% 2010 -9.0% 8.6% 2011 -3.8% -1.3% 10% 2012* -6.7% -9.8% * 4 Quarters to Q3 2012 5% 0% -5% -10% -15% -20% Source: DFP & ONS -25% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Following a period of significant divergence between NI & GB construction orders are now going in the same direction Construction Output - New Work Y/Y Y/Y Growth NI GB 25% Annual Growth 20% NI GB 2009 -10.2% -14.2% 15% 2010 -13.1% -0.6% 2011 -16.9% +12.3% 10% 2012* -5.8% -1.2% *4 quarters to Q3 2012 5% 0% -5% -10% -15% -20% Source: DFP & ONS -25% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
NI posting growth in Repair & Maintenance output (due to targeted public expenditure) in 2011& 2012 Repair & Maintenance Output Y/Y Y/Y Growth 20% NI GB 15% 10% 5% 0% -5% Annual Growth NI GB -10% 2009 -0.4% -4.3% 2010 -1.3% -7.0% -15% 2011 4.6% 1.1% 2012* 1.1% 0.8% *4 quarters to Q3 2012 Source: DFP & ONS -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
Disclaimer This document is issued for information purposes only for clients of Ulster Bank Group who are eligible counterparties or professional customers, and 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 readers 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) derivates 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. Ulster Bank Limited Registered Number R733 Northern Ireland. Registered Office 11-16 Donegal Square East, Belfast, BT1 5UB. Authorised and regulated by the Financial Services Authority. Member of The Royal Bank of Scotland Group. Ulster Bank Ireland Limited, a private company limited by shares, trading as Ulster Bank, Ulster Bank Group and Bank Uladh. Registered No. 25766. Registered Office Ulster Bank Group Centre, George’s Quay, Dublin 2. Ulster Bank Ireland Limited is regulated by the Central Bank of Ireland. Member of The Royal Bank of Scotland Group. Calls may be recorded. Slide 56

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Latest quarterly output indices for the Northern Ireland economy

  • 1. Northern Ireland Private Sector Output Indices Q3 2012 Update Issued 25th January 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
  • 2. Summary Table – NI Private Sector Output Northern Ireland Private Sector Output Private Sector  Index of Services  Index of  Index of  PMI Index Output Index (excludes public sector) Production Construction* 2006 Q1 108.5 105.8 107.5 119.8 54.3 Q2 109.9 107.8 110.3 116.8 56.7 Q3 113.2 111.6 111.1 123.3 54.4 Q4 113.4 111.3 111.7 124.2 57.9 2007 Q1 111.9 107.9 114.0 124.5 58.2 Q2 113.8 111.0 114.5 124.4 55.9 Q3 113.4 110.2 117.2 119.1 57.9 Q4 111.9 107.7 118.6 116.0 52.5 2008 Q1 108.3 106.2 119.5 111.6 47.9 Q2 108.4 104.9 120.6 115.1 45.0 Q3 105.2 103.2 117.0 106.4 37.3 Q4 101.9 101.2 109.6 104.9 33.2 2009 Q1 102.0 102.0 102.5 101.8 34.0 Q2 99.6 100.1 98.3 101.0 40.8 Q3 98.8 98.8 99.0 99.4 46.2 Q4 99.2 99.1 100.2 98.0 49.3 2010 Q1 99.2 100.5 100.1 91.9 44.5 Q2 98.5 99.8 100.1 90.5 46.3 Q3 97.9 97.7 102.4 90.2 44.9 Q4 97.0 96.1 105.4 84.7 42.2 2011 Q1 96.5 94.9 107.6 81.4 47.0 Q2 96.6 98.1 103.0 76.8 46.2 Q3 96.5 94.6 109.8 77.6 43.7 Q4 97.4 96.3 109.2 78.2 48.0 2012 Q1 97.9 96.0 109.9 82.1 43.9 Q2 95.8 96.5 104.3 75.4 43.3 Q3 96.6 98.4 104.2 71.8 44.8 Q4 … … … … 44.8 Latest Quarter Q/Q % Change 0.8% 2.0% ‐0.1% ‐4.8% N.A Latest Quarter Y/Y % Change 0.1% 4.0% ‐5.1% ‐7.5% N.A Last 4 quarters Y/Y % Change 0.3% 0.9% 0.4% ‐4.1% N.A Q3 2012 % Change relative to peak ‐15.2% (Q2 07) ‐11.8% (Q3 06) ‐13.6% (Q2 08) ‐42.3% (Q1 07) N.A Source: DFP indices of production, construction (*rebased 2009=100) and services; Ulster Bank Private Sector Output Composite index & Ulster Bank PMI. 
  • 3. ‘Winners’ during the downturn… Change in NI Private Sector Output Q2 2007 ‐ Q3 2012 Industrial Group % Change Recession Winners ↑↑↑ Other Services 50.0% Chemicals & Pharmaceutical Products  26.8% Utilities (Electricity & Gas) 10.1% Transport, Storage & Communications 7.3% Food, Drink & Tobacco 5.8% Wholesale & Retail Distribution, Accommodation & Food Service 1.2% Agriculture (Gross annual output in real terms 2007‐11) 0.5% Source: DFP Indices of Production, Services and Construction, DARD & Ulster Bank calculations Slide 3
  • 4. ….outnumbered by ‘losers’ & ‘big losers’ Change in NI Private Sector Output Q2 2007 ‐ Q3 2012 Industrial Group % Change Recession Losers    ↓↓↓ Utilities (Water Supply & Waste Management) ‐1.4% Engineering & Allied Industries ‐6.5% All Production Industries ‐9.0% All Manufacturing ‐11.4% All Private Sector Services ‐11.4% Total Private Sector Output (Construction + Production + Private Services) ‐15.2% Recession Big Losers    ↓↓↓ Basic Metals & Fabricated Metal Products ‐23.4% Textiles & Textile Products ‐23.7% Total Other Manufacturing ‐32.7% Mining & Quarrying ‐33.3% Construction / Wood & Paper Products ‐35.1% Construction / property related Rubber, Plastics & non‐metal Products ‐41.1% property Construction ‐42.2% related Business Services & Finance ‐48.2% Source: DFP Indices of Production, Services and Construction, DARD & Ulster Bank calculations Slide 4
  • 5. Quarter-on-Quarter Risers & Fallers Quarterly Change in Private Sector Output Q2 2012 ‐ Q3 2012 Industrial Group NI UK Quarter‐on‐Quarter Risers ↑↑↑ Food, Drink & Tobacco 4.4% 0.3% Wholesale & Retail Distribution, Accommodation & Food Service 4.0% 1.9% Chemicals & Pharmaceutical Products  3.9% 0.1% Business Services & Finance 2.9% 0.9% Transport, Storage & Communications 2.4% 0.2% All Private Sector Services 2.0% 1.2% Utilities (Electricity & Gas) 1.4% ‐2.3% Total Private Sector Output (Construction + Production + Private Services) 0.8% N.A Quarter‐on‐Quarter Fallers ↓↓↓ All Production Industries ‐0.1% 0.7% All Manufacturing ‐0.3% 0.7% Other Services ‐0.5% 1.6% Engineering & Allied Industries ‐1.1% 1.6% Textiles & Textile Products ‐2.2% ‐2.3% Total Other Manufacturing ‐2.7% 0.3% Utilities (Water Supply & Waste Management) ‐3.4% 2.5% Mining & Quarrying ‐3.7% 2.0% Wood & Paper Products ‐4.0% ‐0.3% Rubber, Plastics & non‐metal Products ‐4.4% ‐0.4% Construction ‐4.7% ‐2.6% Basic Metals & Fabricated Metal Products ‐8.7% 3.3% Source: ONS, DFP Indices of Production, Services and Construction & Ulster Bank calculations Slide 5
  • 6. Year-on-Year Risers & Fallers Annual Change in Private Sector Output Q3 2011 ‐ Q3 2012 Industrial Group NI UK Year‐on‐Year Risers ↑↑↑ Chemicals & Pharmaceutical Products  16.8% ‐7.0% Other Services 8.6% 2.8% Wholesale & Retail Distribution, Accommodation & Food Service 7.1% 1.5% All Private Sector Services 4.0% 1.2% Wood & Paper Products 1.5% ‐7.9% Total Private Sector Output (Construction + Production + Private Services) 0.1% N.A Year‐on‐Year Fallers ↓↓↓ Utilities (Electricity & Gas) ‐0.6% ‐1.1% Business Services & Finance ‐1.0% 1.0% Transport, Storage & Communications ‐1.2% ‐1.5% Engineering & Allied Industries ‐3.6% 5.0% Mining & Quarrying ‐3.9% ‐6.4% Food, Drink & Tobacco ‐4.1% ‐2.1% All Production Industries ‐5.1% ‐1.8% Utilities (Water Supply & Waste Management) ‐5.5% 1.3% All Manufacturing ‐5.6% ‐1.5% Basic Metals & Fabricated Metal Products ‐6.7% 3.0% Construction ‐7.5% ‐11.3% Textiles & Textile Products ‐11.6% ‐3.8% Total Other Manufacturing ‐12.0% ‐5.9% Rubber, Plastics & non‐metal Products ‐16.7% ‐6.9% Source: ONS, DFP Indices of Production, Services and Construction & Ulster Bank calculations Slide 6
  • 7. Private Sector Output Compiles official Indices of Construction, Production & Private Sector Services into a single composite index
  • 8. Q3 posts rebound after Q2 marked the steepest quarterly decline in private sector output since Q2 2009 NI Private Sector Output Levels & Growth Q/Q Growth Index 2009 = 100 6% 120 Q/Q Left Hand Scale PSO Right Hand Scale 5% 115 4% 110 3% 2% 105 1% 100 0% 95 -1% 90 -2% -3% 85 Source: Ulster Bank Private Sector Output Index, 2009 = 100 -4% 80 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
  • 9. The PMI signalled a contraction in Q3 2012 whereas the Private Sector Output index posts a rise NI Private Sector Output Index Versus NI PMI PSO Q/Q% PMI UB PSO Left Hand Scale UB PMI Right Hand Scale 5 65 50 mark is the threshold for expansion / contraction with PMI 4 60 3 Expansion 2 55 1 50 0 45 -1 -2 40 -3 Contraction 35 -4 Source: Ulster Bank Private Sector Output (Index 2009 = 100) up to Q3 2012 & Markit Economics -5 30 2003 Q4 2005 Q2 2006 Q4 2008 Q2 2009 Q4 2011 Q2 2012 Q4
  • 10. Remember its levels of output not growth rates that are important - private sector output still at 2003 levels NI Private Sector Output Levels Composite of construction, production and services sectors PSO Index **Excludes Agriculture** 120 115 110 15.2% below peak & at 2003 levels 105 100 95 15.8% 90 fall 85 80 Source: Ulster Bank Private Sector Output Index (2009=100), using DFP output indices & ABI weights 75 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3 Slide 10
  • 11. Strong growth in services more than compensates for steep fall in construction output in Q3 2012 NI Private Sector Output Growth Q/Q Quarterly 8% Services Production Construction Total 6% 4% 2% 0% -2% -4% -6% -8% Source: Ulster Bank Private Sector Output Index and DFP -10% 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 12. Private sector services is the only sector posting year- on-year growth in Q3 2012 Y/Y NI Private Sector Output Growth Y/Y 15% Services Production Construction Total 10% 5% 0% -5% -10% -15% Source: Ulster Bank Private Sector Output Index and DFP -20% 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 13. Services & total private sector output post first annual growth since 2007 NI Private Sector Output Growth Y/Y Annual 10% Services Production Construction Total 5% 0% -5% -10% Source: Ulster Bank Private Sector Output Index & DFP, * based on 4 quarters to Q3 2012 -15% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
  • 14. Industrial sector was last sector to go into downturn & the first industry to come out of it. But IP recovery has stuttered NI Private Sector Output Levels Index Q2 2007 = 100 Index Services Industrial Production Construction Total 110 Q2 2007 Peak Level of Total Private Sector Output 100 90 80 70 60 Source: Ulster Bank PSO Index & DFP 50 2007 Q2 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
  • 15. Services sector output has now been below its pre- downturn peak for 24 quarters or 6 years NI Private Sector Output Relative to Pre-Recession Peaks As of Q3 2012 (Peak = 0) 10% Total Private Sector Output Private Sector Services Industrial Production Construction 0% -11.8% -10% -13.3% -15.1% -20% -30% -40% -42.3% -50% 0 2 4 6 8 10 12 14 16 18 20 22 24 Time in Quarters Since Pre-Recession Output Peak
  • 16. Construction remains the only sector that has experienced no recovery in output whatsoever % NI's Private Sector Output 20% Peak to Trough Recovery from Trough Q3 2012 Relative to Peak 10% 0% -10% -20% Peak Q2 2008 Peak Q3 2006 Peak Q2 2007 Peak Q2 2008 -30% -40% Peak Q1 2007 Source: DFP & UB PSO Index -50% Industrial Manufacturing Construction Services Private Sector Production
  • 17. Northern Ireland will not be returning to 2007 peak anytime soon – 2021 if trend rate of growth is halved PSO Index NI Private Sector Output Levels 150 Based on heroic assumption of pre- 140 recession growth (public expenditure, Had pre-recession property, retail, Celtic Tiger booms growth rate continued 130 Q2 2017 return to pre-recession peak 42% 120 gap 110 100 Return to 2007 Q2 peak output 90 2021 Q4 Source: Ulster Bank Private Sector Output Index, Index 2009 = 100 80 2001 Q4 2004 Q2 2006 Q4 2009 Q2 2011 Q4 2014 Q2 2016 Q4 2019 Q2 2021 Q4 No Credit Crunch / Recession Pre-crisis growth rate returns Trend rate of growth halved
  • 19. Summary Table - Private Sector Services Output NI & UK Private Service Sector Output  Q/Q Change       Y/Y Change        Change since peak*  Service Sector Category Q3 2012 Q3 2012  2006 Q3 ‐ 2012 Q3 NI UK NI UK NI UK Wholesale, Retail, Repair, Accommodation & Food  4.0% 1.9% 7.1% 1.5% 2.4% 2.4% Service Transport, Storage, Information & Communication 2.4% 0.2% ‐1.2% ‐1.5% 12.5% 2.2% Other Services** ‐0.5% 1.6% 8.6% 2.8% 40.4% 9.2% Business Services & Finance 2.9% 0.9% ‐1.0% 1.0% ‐49.2% 8.2% Total Services 2.0% 1.2% 4.0% 1.2% ‐11.8% 6.5% Source: ONS & DFP Index of Services, * NI peak was Q3 2006 whereas UK peak was Q4 2007, **NI & UK have a  different  coverage
  • 20. Private sector services output rises (albeit from a low base) for the 2nd consecutive quarter in Q3 2012 NI Private Sector Services Output Levels & Growth Q/Q Growth Index 2009 = 100 Q/Q % LHS Index RHS 8% 120 Source: DFP Index of Services (Index 2009 )= 100 115 6% 110 4% 105 100 2% 95 0% 90 85 -2% 80 -4% 75 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
  • 21. Three service sub-sectors experiencing higher levels of output in Q3 2012 relative to pre-downturn peak NI Private Sector Services Output Levels Index 2006 Q3 = 100 relative to 2006 Q3 private service sector peak +39.3% 140 Source: DFP Index of Services 130 Sectors gaining during downturn 120 +12.6% 110 +2.4% 100 90 Sectors losing during downturn -11.8% 80 70 All Services 60 Wholesale, Retail, Accommodation & Food Service Transport, Storage, Information & Communication 50 Business Services & Finance Other -49.2% 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 22. UK services output is now back above its pre-downturn peak. NI remains almost 12% below its pre-downturn high Private Sector Services Output Levels Index 2009 = 100 120 NI UK above pre- 115 recession peak below peak 110 105 100 95 Back to late 2004 levels 90 11.8% below peak 85 Source: DFP & ONS Index of Services 80 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
  • 23. NI’s Business Services & Finance output remains almost 50% below its Q3 2006 high Business Services & Finance Output Levels Index 2009 = 100 150 NI UK 140 1.1% 130 off peak 120 110 100 90 80 49% below 70 peak 60 Source: DFP Index of Services, ONS 50 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
  • 24. NI’s Distribution, Accommodation & Food Services output back above pre-downturn peak. Hotel occupancy rates at record highs Distribution, Accommodation & Food Services Output Index 2009 = 100 (includes Retail, Hotels & Restaurants, Car Sales) 115 1.2% above pre- 110 recession peak 105 100 95 £ depreciation increased South >North trade £ appreciating versus euro reduces 90 South > North trade + severe winter Q4 10 & Q1 2011 85 Source: DFP & ONS Index of Services NI UK 80 2003 Q3 2005 Q4 2008 Q1 2010 Q2 2012 Q3
  • 25. The strength of the rebound in this consumer sensitive sector appears odd but has been boosted by tourism industry NI Distribution, Accommodation & Food Services Q/Q Growth Index 2009 = 100 Q/Q % LHS Index RHS 8% 2007 Q2 110 6% 105 4% 100 2% 95 0% 90 -2% 85 -4% -6% 80 Source: DFP Index of Services (Index 2009 )= 100 -8% 75 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
  • 26. Some NI service sectors have benefited from an uplift in external trade Transport, Storage, Information & Communication Index 2009 = 100 Output Levels 120 NI series high NI UK 110 100 90 80 Source: DFP & ONS Index of Services 70 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
  • 28. Summary Table – NI & UK Industrial Output NI & UK Industrial Output  Q/Q Change       Y/Y Change        Change since peak*  Industrial Production Category (NI Weights in brackets) Q3 2012 Q3 2012  2008 Q2 ‐ 2012 Q3 NI UK NI UK NI UK Manufacturing (weight 85.0%) ‐0.3% 0.7% ‐5.6% ‐1.5% ‐16.2% ‐7.1% Electricity, Gas, Steam & Air Conditioning Supply  1.4% ‐2.3% ‐0.6% ‐1.1% ‐2.7% ‐7.5% (weight 5.1%) Water Supply,Sewerage & Waste Management  ‐3.4% 2.5% ‐5.5% 1.3% ‐1.9% ‐4.4% (weight 7.6%) Mining & Quarrying (weight 2.3%) ‐3.7% 2.0% ‐3.9% ‐6.4% ‐24.8% ‐32.8% Total Production ‐0.1% 0.7% ‐5.1% ‐1.8% ‐13.6% ‐10.8% Source: ONS & DFP Index of Production, *peak referred to is NI industrial output peak not the UK's which was 2008 Q1
  • 29. NI has recovered just over one quarter of the industrial output lost during the recession (UK has recorded 0%) NI & UK Industrial Output Levels Index 2008 relative to NI's peak in Industrial Output 2008 Q2 Q2 = 100 105 2008 Q2 Industrial Production 100 O t tL l 95 90 18% 85 fall 13.6% below peak 80 75 Source: DFP, ONS NI UK 70 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
  • 30. In Q3 2012 NI manufacturing posts its third quarterly fall in four quarters NI Manufacturing Output Levels & Growth Q/Q Growth Index 2009 = 100 8% 140 Q/Q % Left Hand Axis Index Right Hand Axis 6% Q2 2008 130 4% 2% 120 0% 110 -2% -4% 100 -6% 90 -8% Source: DFP Index of Manufacturing (Index 2009 )= 100 -10% 80 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
  • 31. NI manufacturing has recouped just over 1/4 of the output lost during the recession (UK over 1/3rd) NI & UK Manufacturing Output Levels Index 2008 relative to NI's Manufacturing Peak Q2 2008 Q2 = 100 NI UK 105 2008 Q2 Manufacturing Output 100 L l -7.1% 95 90 23% 85 fall 80 16.2% below 75 peak Source: DFP, ONS 70 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
  • 32. Manufacturing output falling in line with PMI in Q3 2012 NI Manufacturing Output PMI Index Index of Manufacturing versus Manufacturing PMI IoM Q/Q 65 PMI LHS IoM Q/Q RHS 6% 60 55 3% 50 0% 45 40 -3% 35 -6% 30 Source: DFP, Markit Economics & Ulster Bank PMI 25 -9% 2003 Q3 2005 Q1 2006 Q3 2008 Q1 2009 Q3 2011 Q1 2012 Q3
  • 33. Summary Table - Manufacturing Output by Sub-sector NI & UK Manufacturing Output by Sub‐sector Q/Q Change       Y/Y Change        Change since peak*  Manufacturing Category (NI Weights in brackets) Q3 2012 Q3 2012  2008 Q2 ‐ 2012 Q3 NI UK NI UK NI UK Engineering & Allied Industries (weight 24.4%) ‐1.1% 1.6% ‐3.6% 5.0% ‐16.8% 5.5% Total Other Manufacturing  (weight 23.3%) ‐2.7% 0.3% ‐12.0% ‐5.9% ‐31.5% ‐17.5% Basic & Fabricated Metal Products  (weight 14.5%) ‐8.7% 3.3% ‐6.7% 3.0% ‐31.9% ‐13.3% Food Products, Beverages & Tobacco (weight 14.1%) 4.4% 0.3% ‐4.1% ‐2.1% ‐0.1% 5.7% Rubber, Plastics & Non‐metallic Mineral Products  ‐4.4% ‐0.4% ‐16.7% ‐6.9% ‐38.5% ‐21.3% (weight 8.9%) Chemical & Pharmaceutical Products (weight 5.3%) 3.9% 0.1% 16.8% ‐7.0% 22.1% ‐21.1% Textiles, Leather & Related Products (weight 3.4%) ‐2.2% ‐2.3% ‐11.6% ‐3.8% ‐7.5% ‐10.4% Total Manufacturing ‐0.3% 0.7% ‐5.6% ‐1.5% ‐16.2% ‐7.1% Source: ONS & DFP Index of Production, *peak referred to is NI industrial output peak not the UK's which was 2008 Q1
  • 34. Still only 1 sector posted higher output levels in 2012 Q3 relative to the pre-downturn manufacturing peak Northern Ireland Manufacturing Output Levels Index 2008 relative to 2008 Q2 Manufacturing Output Peak Q2 = 100 130 Chemicals +22% Sectors gaining 120 during recession 110 Food & Drink 0% 100 Textiles & -8% 90 Engineering -17% 80 Wood & Paper -32% 70 Metals -32% Other -32% 60 Sectors losing Rubber & 50 during recession Plastics -38% 40 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
  • 35. Those sectors exposed to construction industry (NI, UK & RoI) remain the furthest below their pre-recession peaks NI Manufacturing Output Q3 2012 Relative to 2008 Q2 Peak 30% Exposed to construction sector 20% 10% 0% -10% -20% -16.2% -30% Source: DFP -40% s g g ts ts s o g er ile tic in rin cc rin uc uc ap er xt as ba tu tu od od &P ne Te ac ac Pl To Pr Pr gi uf uf d r& En & oo al al an an ic et be k W lM M rin m M ub he er ,D Al R th C od O Fo
  • 36. UK engineering output is now 3% higher than it was before the downturn whereas NI’s is still 17% lower Engineering Output as of Q3 2012 (% Change in Output since pre-recession peak: UK Peak Q1 2008, NI Q2 2008) 20% NI UK UK output now 3% higher than the pre-downturn peak 10% 0% -10% -17% below peak -20% -30% 36% rise -40% Seagate Limavady Plant Source: DFP, ONS & UB Calculations closes 25 September 2008 -50% Peak 0 2 4 6 8 10 12 14 16 18 Quarters After Pre-Recession Output Peak
  • 37. Within engineering, the Transport Equipment sector is now 9% below its pre-recession peak NI Engineering Output Levels relative to 2008 Q2 Manufacturing Peak Index Q2 2008 = 100 120 Sectors gaining Transport Equipment during recession e.g. Bombardier, 110 Wrightbus -9% 100 Computer, Electronic, 90 Electrical & Optical Equipment e.g. Seagate 80 -19% 70 60 Sectors losing Machinery & Equipment 50 during recession e.g. FG Wilson / Caterpillar -30% 40 2008 Q1 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2011 Q4 2012 Q3
  • 38. Biggest fallers within manufacturing….. Peak to Trough Fall in Output relative to 2008 Q2 peak Food, Drink & Tobacco Chemicals & Chemical Products Textiles Manufacturing Total Other Manufacturing Wood &Paper Products Basic & Fabricated Metal Products Rubber & Plastics Engineering Computer, Electronic, Electrical & Optical Equipment Transport Equipment Machinery & Equipment -60% -50% -40% -30% -20% -10% 0%
  • 39. …have become biggest gainers from global recovery Recovery in NI Manufacturing Output Since Trough as of 2012 Q3 Transport Equipment Engineering Machinery & Equipment Computer, Electronic, Electrical & Optical Equipment Chemicals & Chemical Products Exposed to global markets Textiles Manufacturing Food, Drink & Tobacco Basic & Fabricated Metal Products Exposed to construction sector Wood &Paper Products (excl. FDT) Rubber & Plastics Total Other Manufacturing Source: DFP 0% 10% 20% 30% 40% 50% 60%
  • 41. Summary Table - Construction Output NI & GB Construction Output   Change since NI  Quarterly Change   Year‐on‐Year  construction peak     Construction Sub‐Sector Category Q3 2012  Change Q3 2012 Q1 2007 ‐ Q3 2012 NI GB NI GB NI GB Housing 0.0% ‐3.3% ‐12.1% ‐12.5% ‐61.7% ‐33.4% Infrastructure 3.5% N.A 1.0% N.A 12.4% N.A Repair & Maintenance ‐0.6% ‐0.9% ‐5.2% 0.1% 7.9% ‐8.3% Other (e.g. commercial & industrial ) ‐9.2% ‐5.3% ‐8.7% ‐16.4% ‐31.6% ‐20.5% New Work ‐6.6% ‐8.7% ‐8.1% ‐7.6% ‐51.3% ‐11.9% Total Construction ‐4.7% ‐2.6% ‐7.5% ‐11.3% ‐42.3% ‐17.6% Source: DFP Construction Bulletin & ONS, ONS presents data as Great Britain (GB) not UK
  • 42. NI’s construction sector still contracting 22 quarters after its pre-downturn high NI Construction Output Levels & Growth Q/Q Growth Index 2005 = 100 8% 140 Q/Q % LHS Index RHS 6% 130 4% 120 2% 2007 Q1 110 0% 100 -2% 90 -4% -6% 80 -8% 70 Source: DFP Index of Construction (Index 2009 )= 100 -10% 60 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3
  • 43. NI’s construction sector posted another steep quarterly fall in output in Q3 2012 Construction Output Q/Q Quarterly Growth 9% Annual Growth Source: DFP & ONS NI GB 2009 -8.5% -13.3% 6% 2010 -10.7% +8.0% 2011 -12.1% +2.6% 2012* -4.0% -6.1% *4 quarters to Q3 2012 3% 0% -3% -6% GB NI -9% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 44. … and NI’s output in Q3 2012 is now some 42% below its Q1 2007 peak Levels of Construction Output Relative to NI's Peak (Q1 2007) Index 2005=100 NI GB GB 18.5% below its 105 peak 95 85 NI 42% Annual Growth 75 NI GB below peak 2009 -8.5% -13.3% 2010 -10.7% +8.0% 65 2011 -12.1% +2.6% 2012* -4.0% -6.1% *4 quarters to Q3 2012 Source: DFP & ONS Index of Construction 55 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1
  • 45. NI’s construction downturn would have been worse without public spending (Infrastructure and Repair & Maintenance) NI Construction Output Levels Relative to 2007 Peak (Index 2007 Q1 =100) Index Housing Infrastructure R&M New Work Other 150 125 +12% +8% 100 75 -38% -51% 50 Source: DFP -62% 25 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 46. GB construction sector recovery has faltered in 2012 after growth in 2010 & 2011 NI & GB Construction Output Y/Y Year-on-Year Growth 15% Annual Growth Source: DFP & ONS NI GB 2009 -8.5% -13.3% 10% 2010 -10.7% +8.0% 2011 -12.1% +2.6% 2012* -4.0% -6.1% 5% *4 quarters to Q3 2012 0% -5% -10% -15% GB NI -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 47. Infrastructure the only sub-sector to post growth in Q3 2012 NI Construction Output by Sub-Sector Q/Q Quarterly Growth Rates 35% Housing Infrastructure Other 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Source: DFP Construction Bulletin -30% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 48. Housing & ‘Other’ output are still falling year-on-year NI Construction Output by Sub-Sector Y/Y Year-on-Year growth 60% Housing Infrastructure Other 45% 30% 15% 0% -15% -30% Source: DFP Construction Bulletin -45% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 49. Forward looking indicators (New Work) highlight that a meaningful construction recovery is not imminent Levels of New Work Construction Output Index Q1 Relative to NI's Peak (Q1 2007) 2007=100 110 GB 15.5% NI GB below its peak 100 90 80 NI 51% below 70 peak Annual Growth NI GB 60 2009 -10.2% -14.2% 2010 -13.1% -0.6% 2011 -16.9% +12.3% 50 2012* -5.8% -1.2% *4 quarters to Q3 2012 Source: DFP & ONS Index of Construction 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 50. NI posts much steeper decline in ‘Other construction’ (commercial & retail) than GB Rebased 2006 Levels of 'Other Construction' Output Q4=100 Relative to NI's Peak (Q4 2006) 120 NI GB GB 29% below its 110 peak 100 90 80 Annual Growth NI GB 70 2008 -3.6% -0.3% 2009 -16.3% -16.9% 60 2010 -9.0% 8.6% 2011 -3.8% -1.3% NI 40% 2012* -6.7% -9.8% below 50 * 4 Quarters to Q3 2012 peak Source: DFP & ONS Index of Construction 40 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 51. GB housing output posts 5th successive quarterly decline. NI housing output flat after 10 quarters of decline in 11 quarters Housing Output Quarterly Growth Q/Q 15% NI GB 10% 5% 0% -5% -10% -15% Source: DFP & ONS -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 52. Annual rate of GB housing output now contracting again which is bad news for NI firms in this market Housing Output Y/Y Y/Y Growth NI GB 40% Annual Growth NI GB 30% 2008 -23.5% -21.0% 2009 -6.8% -25.0% 20% 2010 -7.0% 24.8% 2011 -22.9% +8.2% 2012* -14.4% -6.7% 10% *4 quarters to Q3 2012 0% -10% -20% -30% Source: DFP & ONS -40% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 53. ‘Other construction’ output within NI & GB has followed a similar growth trajectory until recently Other Construction Output Y/Y Y/Y Growth NI GB 25% Annual Growth NI GB 20% 2008 -3.6% -0.3% 2009 -16.3% -16.9% 15% 2010 -9.0% 8.6% 2011 -3.8% -1.3% 10% 2012* -6.7% -9.8% * 4 Quarters to Q3 2012 5% 0% -5% -10% -15% -20% Source: DFP & ONS -25% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 54. Following a period of significant divergence between NI & GB construction orders are now going in the same direction Construction Output - New Work Y/Y Y/Y Growth NI GB 25% Annual Growth 20% NI GB 2009 -10.2% -14.2% 15% 2010 -13.1% -0.6% 2011 -16.9% +12.3% 10% 2012* -5.8% -1.2% *4 quarters to Q3 2012 5% 0% -5% -10% -15% -20% Source: DFP & ONS -25% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
  • 55. NI posting growth in Repair & Maintenance output (due to targeted public expenditure) in 2011& 2012 Repair & Maintenance Output Y/Y Y/Y Growth 20% NI GB 15% 10% 5% 0% -5% Annual Growth NI GB -10% 2009 -0.4% -4.3% 2010 -1.3% -7.0% -15% 2011 4.6% 1.1% 2012* 1.1% 0.8% *4 quarters to Q3 2012 Source: DFP & ONS -20% 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3
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