Thursday, December 1, 2011

1/12/2011: Manufacturing PMI for Ireland - November

Manufacturing PMI for November has signalled renewed downward pressure in sectoral activity.

Having posted a surprise, EU-wide trend-breaking increase from 47.3 in September to 50.1 in October (a reading above 50 is consistent with expansion, albeit a reading between 50 and roughly speaking 52.5 is statistically insignificantly different from 50), the core Manufacturing PMI fell again into the contraction territory in November, posting 48.5.

More ominously, 3 mo average through November is now 48.6 and 3mo average through August is at 49.2, so last six months on average have posted a contraction in Manufacturing activity. Thus, Manufacturing PMIs are now firmly flashing recession warning signs. A year ago, 3mo average through November 2010 stood at 50.2. 12 mo MA is remaining above 50 at 51.8 due to solid gains achieved in January-April 2011.

Output reading is now also below 50 with November Output measure coming in at 48.3, down from 52.7 in October. 3mo average through November is barel above 50 at 50.3 and 3mo average through August is at 50.5. November 2011 reading is the lowest since January 2010.

Like the main indicator, New Orders sub-index has posted average below 50 readings in 6 months through November. The sub-index is now at 49.7, down from 51.4 in October. New exports orders sub-index remained just below 50 for the third month in a row at 49.9 in November, compared against 49.8 in October. And backlogs of existent orders continued to contract at 44.2 in November - 9th month of straight declines.

Output prices accelerated factory gates deflation at 48.2 in November compared to 49.2 in October - for the fourth consecutive month. Meanwhile input prices index signalled continued strong inflation at 55.2 in November, unchanged from October. This trend is present in the data since January 2010 uninterrupted. Thus profit margins in manufacturing continued to decline at accelerating pace (more on this in a separate blog post once we have PMIs for services as well).

Stocks of purchases declined rapidly at 41.3 in November - deeper contraction than 44.5 registered in October. Meanwhile rate of decline in stocks of finished goods (46.1 against 45.4 in October) has slowed down, suggesting build up of inventories and putting potential pressure on one of components of GDP and GNP down the line.

Employment also posted third consecutive month of declines - November reading is 48.3 against 47.1 in October. 3mo average through November is 47.3 - well below already contractionary 3mo average through August at 49.5. In 2010, 3mo average through November stood at a less sharply contracting 47.9.

Overall, pretty brutal data for Manufacturing.

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