Friday, November 14, 2014

14/11/2014: Irish Construction Sector PMIs: A Bit Bubbly, A Bit Bonkers…


Ulster Bank and Markit published Construction PMI for Ireland, and the numbers signal huge uplift in activity across all sub-sectors, excluding Civil engineering. However, Civil Engineering post an above 50 reading (albeit consisted with virtually no growth) for the first time since Q1 2006.

So here we have it:

Total Activity PMI for Construction sector in Ireland rose to 64.9 in October, signalling huge rates of growth, despite few cranes being visible around. 3mo average through October is at 62.6 against 3mo average through July at 60.9. Similar rises were recorded in 6mo average through October. All of which suggests we should be seeing a massive boom. Of course we are not. Why? Because the levels from which the activity is rising are… well, microscopic.


Housing sub-sector PMI rose moderated slightly to 66.4 from the blistering 68.4 a month ago. 3mo average through October is at 66.17 against 3mo average through July at 62.57. Again, the above numbers would have signalled we are in a new bungalow blitz boom, except we are not. At least not yet.


Commercial sub-sector PMI hit 66.8 in October, a solid rise from already boiling 62.7 in September. 3mo average through October is at 64.23 which is up on 61.8 3mo average through July 2014.


Civil Engineering PMI came in at 50.6 in October, which is welcomed sign. Still 3mo average through October remains below 50.0 at 48.0 and that is a slight improvement on 3mo average through July (47.43).

Crucially, the improvement in the Civil Engineering sub-index pushed all sub-sectors to co-move as the table below shows:



It is worth remembering that Construction Sector PMIs seem to have little bearing to the reality in the sector activity on the ground as shown below, so it is worth taking these numbers with a grain of salt.


Just how bonkers is the above PMI data? Or just how much salt to be used with that fish:


Yep, historically, PMIs decline when activity expands and vice versa...
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