Today sees the release of December data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled further reductions in output and new orders, but rates of decline softened. Meanwhile, companies increased their staffing levels for the first time in a year and confidence regarding the 12-month outlook for activity improved amid reduced uncertainty around Brexit. On the price front, the rate of input cost inflation softened again and companies lowered their output prices for the first time in over four years.
2019
Big Economic Review of the Year 2019
Each December, we try to bring together some of the greatest minds in business and economics to review the year just past.
Unfortunately they’re never available. However, whilst you’re stuck with me, Richard Ramsey, we have been able to enlist the fantastic Stephen Kelly, Chief Executive of Manufacturing NI, and the incomparable Richard Johnston of Ulster University’s Economic Policy Centre to consider the good, the bad and the ugly of the NI, UK and global economies in 2019 and to speculate about who might be the economic villains of 2020.
We got together in Ulster Bank headquarters in Belfast earlier this week and covered a lot of ground… Have a listen and hopefully you find it useful and interesting.
Watch the podcast:
On-the-go? Prefer to listen to the review on SoundCloud?
Bye for now and have a great Christmas and New Year!
Three quarters full or three quarters empty?
They say a week is a long time in politics and it can also be a long time in economics. Over the past seven days, we’ve had a wave of data released that tells us much about what happened in the third quarter of the year and how the local economy is currently performing.
When China sneezes….
The old saying is that the US economy sneezes and the rest of the world catches cold. This phrase reflected the old influence and dominance of America in the global economy. However, since the worldwide recession a decade ago, China has had a spectacular rise and is challenging US hegemony. Indeed, the concerns now are about the Chinese Dragon spreading its economic germs.
Sharpest fall in business activity since end of 2012
Today sees the release of April data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled that the Northern Ireland private sector moved deeper into contraction territory. Business activity, new orders and employment all fell to the greatest extents since the final quarter of 2012, with Brexit and a lack of government at Stormont impacting negatively on operations. Weakening demand led companies to raise their selling prices at only a modest pace during the month, despite continued sharp input cost inflation.
Export orders fall at their fastest pace in 69 months
Today sees the release of February data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled that business activity in Northern Ireland rose only fractionally in February. The near-stagnation in output reflected Brexit worries, with total new orders falling for the first time in 28 months, new export business down sharply and business sentiment turning negative. Meanwhile, companies lowered their staffing levels for the second month running.
Weekly Brief – Gloomy
Following a path laid by the US Federal Reserve, who recently adopted a more neutral position towards monetary policy, the Bank of England’s February Inflation report clearly signalled no urgency to raise rates. The 2019 growth forecast was cut sharply. The main culprits were mounting concerns about Brexit plus the wider global outlook.
Employment falls for first time in four years
Today sees the release of January data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – indicated that business conditions in Northern Ireland were subdued at the start of 2019 amid Brexit uncertainty. Business activity rose at the weakest pace in 28 months, while new orders increased only marginally. As a result, companies lowered staffing levels for the first time in four years.
UK CPI Inflation set to fall further in 2019
Consumer confidence both nationally and locally is not in a great place. Clearly the ongoing “political recession” isn’t helping the mood either. The good news, however, is that inflationary pressures continue to ease with the headline Consumer Price Index rising by 2.1% y/y in December. That marks the weakest rate of consumer price inflation in almost two-years. Significantly this welcomed move is coinciding with wages rising at their fastest rate in a decade.
Falling petrol prices were a key driver behind the latest downward move. Petrol price inflation slowed from 7.6% y/y in November to 1.5% y/y last month. Back in October prices were rising at 11.5%. This trend is set to continue with an easing in energy related inflationary pressures both in utility bills and petrol / diesel costs.
Significant price cuts to gas and electricity bills are expected to be announced later this month. Similarly, home-heating oil customers should see further significant falls in the coming weeks and months. Petrol and diesel prices have already fallen by around 2% in the first two weeks of January. Food price inflation also slowed dramatically during 2018. Having started the year at 3.9%, annual food price inflation eased to 0.4% in December. What does or doesn’t happen with Brexit (supply disruptions etc) could have a major bearing on food prices in 2019.
In the near-term, CPI inflation looks set to fall below the MPC’s 2% target in January with the annual pace of consumer price rises set to slow to 1.3% / 1.4% by Q4 2019. Against this backdrop and given the growing risks of a global slowdown coupled with the near-term concerns surrounding Brexit, the Bank of England isn’t going to be in a hurry to raise interest rates. 2019 could well see the Monetary Policy Committee sit on its hands and keep its Bank Rate at 0.75%.
New orders stagnate in December
Today sees the release of December data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to no change in new orders at the end of 2018. Meanwhile, business activity and employment continued to rise solidly, albeit at weaker rates than in November. Both input costs and output prices increased at marked rates again, but inflationary pressures showed some signs of easing at the end of the year.
