Friday, October 3, 2014

3/10/2014: Ireland: Quarterly PMIs and Composite Activity Index: Q3 2014

As promised in the previous post, covering monthly Services PMI (, here is my analysis of quarterly data and my own Composite Activity Index across manufacturing and services sectors, as well as construction sector.

All data reported is based on my calculations using Markit/Investec PMIs.

In Q3 2014, Manufacturing PMI averaged 56.1 which is up on 55.5 average for Q2 2014 and is up on Q3 2013 average of 51.9. Q3 2014 marks the 5th consecutive quarter of expansion in the series.

Services PMI stood at 62.1 in Q3 2014, unchanged from 62.1 in Q2 2014 and up on 58.7 Q3 2013 reading. This quarter marked 15th consecutive quarter of above 50 readings in PMI.

Construction PMI (data through August so far only) is at 62 in Q3 2014, up on 61.2 in Q2 2014 and 51.0 in Q3 2013. This marks 5th consecutive quarter of expansion in the sector.

Composite Activity Index is now at 60.35 in Q3 2014 ex-Construction, up on 60.16 in Q2 2014 and on 59.95 in Q3 2013. This is 18th consecutive quarter of composite indicator above 50.0. Including construction, Composite Activity Index is at 60.38, up on Q2 2014 reading of 60.18 and up on Q3 2013 reading of 56.81.

Chart to illustrate:

On a note of caution: showing just how weak the PMI indices are in predicting Irish growth, here are two charts plotting log changes in PMIs against log changes in GDP and GNP. In all cases, explanatory power of changes in PMIs is weak when it comes to matching the outcomes in growth in the real economy. The same qualitative results hold for levels of PMIs against log changes in GDP and GNP and to levels of PMIs against actual GDP and GNP levels.

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