Thursday, January 2, 2014

2/1/2014: Manufacturing PMI for Ireland: December 2013

Manufacturing PMI is out for Ireland today, per Markit/Investec release: "The Irish manufacturing sector ended 2013 on a positive note as growth of output and new orders gained momentum in December. Meanwhile, the current sequence of job creation was extended to seven months. On the price front, input cost inflation picked up slightly while firms raised their output prices for the fourth month running."

Please note: since Markit/Investec no longer release actual numbers for subindices (e.g. employment or orders or export orders, etc), we have to take these claims on faith. For example, the release claims increased export orders from China as one of the drivers of the new business improvement. Yet Irish exports to China are low and it is hard to see how this source of uplift can register as a driver in the overall data, unless the survey participation is severely skewed toward some specific MNCs with remaining significant exposure to exports to China.

Note: Good exports to China from Ireland in January-October 2013 stood at a miserly EUR1.642 billion, down from EUR1.885 billion recorded in the same period of 2012 and representing just 2.26% of our total goods exports in January-October 2013.

Further per release: "The seasonally adjusted Investec Purchasing Managers‟ Index® (PMI®) – an indicator designed to provide a single-figure measure of the health of the manufacturing industry – rose to 53.5 in December from 52.4 in November. This signalled a solid improvement in business conditions, and the seventh in as many months."

The last claim is a matter of interpretation. 1.1 points gain in the PMI reading is the 4th largest in 12 months of 2013 and 7th largest in the last 24 months. However, the index reading in December is the 2nd highest in 2013 and the 3rd highest over the last 2 years, which is, undoubtedly, a good thing.

Two charts and dynamic trends to illustrate headline index changes:

In terms of overall PMI, Manufacturing activity averaged at 51.1 over the last 12 months, so the current reading is above that. However, December reading is below the 3mo average for November-December 2013 which stands at 53.6.

Q1 2013 average PMI for Manufacturing was 50.13, and this fell to 49.33 in Q2 2013, before rising to 51.9 in Q3 2013 and to a healthy 53.6 in Q4 2013.

Overall, we are now into third consecutive month with the PMI for Manufacturing index statistically above 50.0. Another good thing.

Full Markit/Investec release is here:
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