Friday, October 3, 2014

3/10/2014: Services PMI for Ireland: September 2014


Markit/Investec released their Services PMI for Ireland today. I covered Manufacturing PMI release here: http://trueeconomics.blogspot.ie/2014/10/1102014-irish-manufacturing-pmi.html

On Services side:

  • MNCs-driven activity in the sector expanded once again, with PMI for September rising to 62.5 from 62.4 in August and almost matching 62.6 reading in June.
  • 12mo MA is now at 60.9 - which is simply unbelievable, given the overall economy performance over the last 12 months. Predictably, of course, there is somewhat little connection between the survey - weighted heavily on MNCs side, such as ICT Services giants we house in Ireland - and the real economy.
  • 3mo average (Q3 2014 average) is at 62.1 which is identical to Q2 2014 average and is ahead of Q3 2013 average of 58.7. In other words, judging by the figures coming out of PMIs, Irish services economy is growing roughly at 7-8 percent per annum. Good luck spotting that on the ground.

Still, the above chart clearly shows that whether connected to real lives or not, Services economy is now averaging growth rates (post-crisis) that are above those recorded in pre-crisis period. This suggests two things:
  1. There has been a significant switch in economic activity in favour of services (dominated by the dynamics in ICT Services); and
  2. There has been a larger gap opening up between the real economy and tax optimisation-based economy.
I will blog on composite performance on quarterly basis, pooling together both Manufacturing and Services PMIs next, so stay tuned.
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