Wednesday, January 5, 2011

05/01/2011: Services PMIs - December 2010

Today's data from NCB Stockbrokers on Services PMIs (Manufacturing sector PMIs were covered in the earlier post here). The trends are generally worrisome:
First the headline numbers:
  • Overall business activity index in services sectors has dipped below expansion mark of 50, with December reading of 47.4 signaling an outright and sharp-ish contraction. 12-months average for the sector was 50.7 - hardly blistering growth, but still a notch above the waterline. Q4 average is now at 49.7 - a steady decline from the annual peak of 52.9 in Q2 and slightly less impressive 52.5 in Q3.
  • New Business index fell to 46.2, marking 4th consecutive month of below 50 performance. 12-months average is at 49.8, with Q4 reading of 46.8 being the lowest quarterly average of 2010.
A snapshot of the series:
Now to detailed sub-indicies:
Since I will be posting separately on employment, it is just worth mentioning that (a) employment index remains under water since February 2008 - marking a truly scary contraction stretching uninterrupted over 34 months now, and (b) employment index fell even lower in December (to 47.8) than in November (48.7).

The rest:
  • New Export Business index is in contraction territory with December reading of 49.7 being the first sub-50 month since August 2009. 12-months average was 53.6 while Q4 average fell to 52.6 from 52.8 in Q3 and the annual peak of 55.3 in Q2.
  • Despite this, Business Expectations actually rose to a strong 62.2 in December against 55.2 in November. 12-months average was 65.5, ahead of Q4 average of 62.8, which marked the lowest quarterly performance of the index for 2010.
  • Profitability remains poor cousin of expectations - Profitability index reached 46.1 in December, down from 48.4 in November. To see last month when profitability was in expansion mode we would have to go back to December 2007, so this December marks 36th month of shrinking profitability for Irish services producers.

Chart above concludes by showing some recovery in prices trends, with output prices still lagging inputs prices inflation. In fact, the gap between two series, having opened up once again around Q2 2010 remains wide.

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