15/3/2012: Irish Industrial production & Turnover for January 2012

Industrial production & turnover figures are out for January 2012. CSO headline: "Industrial Production increased by 0.7% in January 2012".behind the headline, things are not so rosy. Here are the details.

Industrial production index for Manufacturing rose in volume terms from 109.6 in December 2011 to 110.3 in January 2012 - that's on of the ca 0.7% increases mom. Series are extremely volatile, so stripping short-term effects:

• Yoy index is down 0.18%
• Compared to same period in 2007 index is down 3.35% - implying that with all records busting exports, industrial production volumes in Manufacturing remain below pre-crisis levels.
• Compared to 2005, manufacturing activity is only 10% up
• Comparing 3mo average for Nov-2011 - January 2012 to 3mo average for Aug 2011-Oct 2011, the index is down 7.5%
• Comparing last 3mo average to same period a year ago, the index is down 2.9%

Still, good news, index did not fall in January.

All Industries index increased from 107.5 in December 2011 to 108.3 inJanuary 2012 - the core 0.74% rise, but:

• Yoy index is down 0.5% and it is down 4.2% on January 2007
• Comparing 3mo average for Nov-2011 - January 2012 to 3mo average for Aug 2011-Oct 2011, the index is down 7.4%
• Comparing last 3mo average to same period a year ago, the index is down 3.2%
• In 7 years, Industrial output rose by just 8.3 cumulative in volume

Modern Sectors fared much better - in monthly terms the index went up 4.9% in January 2012, and year on year the index is up 4.1%. That said:

• Comparing 3mo average for Nov-2011 - January 2012 to 3mo average for Aug 2011-Oct 2011, the index is down 9.5%
• Comparing last 3mo average to same period a year ago, the index is down 3.2%
• In 7 years, Industrial output rose by just 27.2% and since January 2007 the index is up 8.5% cumulative in volume

So some shorter-term pain, but overall, nice performance. Of course the trend (as shown in the chart below) is clear-cut and strong.

Traditional sectors continued to take the beating: down from 88.7 in December to 82.2 in January - a mom drop of 7.4% - the steepest in 4 months. The things are bad:

• Yoy volume of production in Traditional Sectors is down 8.2%
• Comparing 3mo average for Nov-2011 - January 2012 to 3mo average for Aug 2011-Oct 2011, the index is down 6.1%
• Comparing last 3mo average to same period a year ago, the index is down 4.2%
• In 7 years, TraditionalSectors volume fell 18% and since January 2007 the index is down 22.9% cumulative in volume

Relative contribution of Traditional Sectors to the economy compared to Modern Sectors is shrinking and the rate of contraction accelerated in January 2012, as shown in the chart below:

Things are worse on the turnover indices side with price deflation took bites out of the value of our economic activity:

• Manufacturing sectors turnover fell from 107.8 in December 2011 to 98.1 in January - a decline of 9% mom. It is now down 3.8% yoy and 14.3% below January 2007. The index is down 2% on 2005. Over last 3 months the index actually up on average 2.8% compared to 3mo average for August-October 2011 and 5.0% above the index reading a year ago, back in November 2010-December 2011.
• Other broader sector - Transportable Goods Industries turnover also fell mom - down 8.8% and is down 3.9% yoy. The pattern of changes is pretty identical to that in Manufacturing.

Looking forward, New Orders index for all sectors came in at a disappointing 98.5 - the lowest reading since April 2011 and 3.7% below January 2011 levels. The index is down 8.9% yoy and 15.8% on January 2007. The historical trend remains firmly downward, but shorter-range trend since january 2010 is strongly up. 

Yoy, New Orders declined 1.9% in Food Products (mom decline of 5.7% in January), rose 5.0% in Beverages (mom rise of 1.2%) and increased 5.5% in Chemicals and Chemical products (+2.7% mom). There was a huge fall off in New Orders in Basic Pharmaceutical Products and Preparations - down 6.9% yoy and 26.4% mom. Computer, electronic and optical products are down 4.3% yoy and 1.2% mom. Do note the patent cliff sighted above - dramatic - and will translate into trade figures as well. Please keep in mind - Government has been saying they have prepared for this.We shall see once trade data & QNAs come in for H1 2012.

So some headline improvements, but overall, weak data.