Wednesday, April 8, 2015

8/4/15: Irish Quarterly PMIs: Services, Manufacturing & Construction

Given we now have data for PMIs for Ireland (via Markit and Investec) through March (see analysis of Manufacturing PMI here and Services PMI here), let's update quarterly PMI averages and compute my own 'composite' indicator based on 3 core sectors: Manufacturing, Construction and Services. Note: Construction sector PMIs are computed on the basis of january-February data as there are lags of 2 weeks in reporting these by Markit.

Manufacturing PMI for Q1 2015 stood at 56.5, down from 56.6 in Q4 2014. Thus, Q/Q the PMI is down 0.18%. In Q4 2014 Manufacturing PMI was up 0.77% Q/Q. So we have a slowdown in growth, but growth nonetheless.  The same holds for yearly comparatives. Q1 2015 was up 5.1% y/y, after posting 5.5% growth in Q4 2014 and 8.2% growth in Q3 2014. The series are trending above 50.0 for the 7th quarter in a row.

Services PMI fell from 61.9 in Q4 2014 to 61.6 in Q1 2015, down 0.5% Q/Q, having posted a decline of 0.3% q/q in Q4 2014. Yearly growth rates also slowed down: in Q3 2014 y/y growth in Services PMI was 5.8%, this fell to 3.7% in Q4 2014 and to 2.8% in Q1 2015. Still, we now have 17 consecutive quarters of growth in Services as recorded by PMIs in excess of 50.0.

Construction PMI (based on 2 months of data for 2015) is currently standing at 54.6, down from 63.8 in Q4 2014. This is a marked reversal in the q/q growth rates from 3.2% in Q4 2014 to -14.5% in Q1 2015, though we need to see March data to make any conclusions on this. Yearly growth rates are falling off the cliff too: in Q3 2014 Construction PMI rose 21.3% y/y, which declined to 8.5% growth in Q4 2014 and to estimated -5.3% contraction in Q1 2015. Again, as with Manufacturing, we do have continued 7 quarters of above 50 readings in the series, so the slowdown is in the rate of growth, not an outright contraction in activity.

As the chart above shows, Composite Index (computed by myself based on sectoral weights in the National Accounts) has posted a relatively sharp decline, driven primarily by the Construction PMI reading. As of today (absent March data for Construction PMI) the composite indicator is reading at 59.0, down from 60.7 in Q4 2014. This is the lowest reading in four quarters, so y/y the index is still up 1.4%, although the rate of growth in the index has fallen from 4.2% recorded in a year through Q4 2014 and 6.7% growth posted in Q3 2014. Nonetheless, the index continues to trend above 50 for the 17th quarter in a row.

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