Monday, November 11, 2013

11/11/2013: Services and Manufacturing PMIs for Ireland: October 2013


With some delay, let's update the data on Irish PMIs.

Before we do, quick explanation for a delay - I used to be on the mailing list for Investec releases to PMIs for years (way before the organisation became a part of Investec). This all ended some months back when I was struck off the mailing list. Presumably, being a columnist with 2 publications & blogger, who always and regularly cites PMIs and Investec as their publisher, is just not enough to earn one the privilege of being sent the release. Oh, well…

Now to numbers… 

Services PMI hit 60.1 in October, up on 56.8 in September, marking the second highest reading since January 2007 (the highest was recorded in August this year at 61.6). This is a strong return. 3mo average for the period August - October 2012 was 53.9, current run is 59.5, so the distance y/y is 10.4% - statistically significant. 

Notably, from January 2010 through current, the average deviation of PMI from 50.0 is 2.5, so we are solidly above the average.

Quarterly averages are also strong. Q1 2013 posted 54.23 and Q2 2013 was at 54.27, but Q3 2013 came in at 58.67. And we are now running well ahead of that.

With full-sample standard deviation of the PMI reading distance to 50.0 at 7.3  (same for the period from January 2008 through current being 6.84), we are now solidly in statistically significant territory for expansion since July 2013.

Manufacturing PMI also strengthened, although by much less than Services. Manufacturing PMI hit 54.9 in October, up on 52.7 in September and 3mo average through October 2013 is at 53.2, which is 3.% ahead of the 3mo MA through October 2012.

Quarterly averages are signalling weaker growth, however. Q1 2013 was at 50.1 (basically, zero growth in statistical terms), while Q2 2013 stood at 49.3 (same - zero growth in statistical terms). Q3 2013 came in at 51.3 and the October reading is ahead of this. In fact, October 2013 reading is the highest since April 2011. October reading is statistically significant, based on historical data, but it is not statistically significantly different from 50 on the basis of data from January 2008.


The above shows one thing: we are above historical and 2008-present averages for both Manufacturing and Services PMIs (good news). Below chart confirms relatively strong performance for the series on 3mo MA basis (good news):


As chart below shows, there is a third good news bit: both series have now broken away from their asymptotic trend, with Manufacturing at last showing some life.



Note to caveat the above. As I showed before, both manufacturing and services PMIs have relatively weak relation to actual GDP and GNP growth, with Manufacturing PMI being, predictably, better anchored to real growth here. Details here: http://trueeconomics.blogspot.ie/2013/10/3102013-irish-pmis-are-they-meaningful.html
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