Monday, May 7, 2012

7/5/2012: Analysis of April Irish PMIs (1): Core Manufacturing

With both Services and Manufacturing PMI data out last week, time to update some charts. This post will deal with core trends in manufacturing PMIs, following by posts covering core data in Services PMIs, employment trends and profitability trends.

Core PMI in manufacturing slid to 50.1 in April 2012 - level consistent with zero growth - from 51.5 in March. Although nominally, the PMI remained for the second month above 50, both March and April readings were not statistically significantly different from 50. Longer term averages also disappointed: 12mo MA slipped to 49.5 - below 50, nominally, 3mo MA is at 50.4. This compares to same-period 3mo average of 56.1 in 2011 and 51.7 in 2010. So overall PMI activity is at the slowest in 3 years. 6mo MA is down at 49.45 and 9mo MA at 49.3.

New Orders sub-index came in at 51.4 in April, a decline from 52.7 in March. March reading was barely statistically significantly different from 50, with April level of activity sliding below the statistical bound. 12mo MA for sub-indicator is now at 49.3 and 3mo MA through April 2012 at 51.4 compares poorly compared to same period average of 58.1 in 2011 and 53.2 in 2010. 6mo MA is at 49.45 and 9mo MA at 49.07.

New Export Orders sub-index is at 53.1, still above the expansion line of 50 and statistically significantly so, but down from 55.1 in March 2012. 12mo MA is at 52.0 and 3mo MA at 52.6, compared to same period 3mo MA of 59.9 in 2011 and 58.7 in 2010.

Thus, out of all 3 core indices, only one - New Export Orders - is consistent with growth. On the positive side, however, all three indices have deteriorated on March, but remained above 50 in nominal terms.

Chart below plots shorter-range highlight for the above series, plus Output sub-index. Output sub-index slipped to 48.6 in April from 52.8 in March - a sizable swing of 83% of the crisis-period STDEV. A nasty surprise pushed 12mo MA to 50.2 - within a whisker of 50, with 3mo MA at 50.6, compared to 2011 same period 3mo average of 59.1 and 2010 of 55.0.

The trend of flat - on average virtually zero growth - in all four series continues since June 2011.

All other core sub-indices are underperforming as well:

The gap between input and output prices is staying wide, implying continued pressures on profit margins (to be covered in a separate post), while employment outlook improved from 51.2 in March to 52.9 in April.

All core series show flat trend at below 50 since, roughly June 2011.

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