Wednesday, September 5, 2012

5/9/2012: Services PMI for Ireland: August

I covered manufacturing PMI for Ireland for August in the previous post (here). This time, lets take a look at the Services Sector PMI released today by NCB.

In July, the Services Sector PMI registered the reading of 49.1 - the third consecutive month of below-50 readings, albeit at statistically insignificant difference from 50. In August, the headline Business Activity index reached 51.7, which is above 50, though once again not statistically significantly so. Still, good to see the number above 51, and at 51.7 we have a signal of modest growth.

Headline trends are:

  • 3moMA is at 50.2, previous 3 months average is at 51.1, so we are still in a fragile bounce above 50. 
  • 12mo MA is at 50.8, which compares relatively poorly to 12moMA through August 2011 (51.7) and 12mo MA through August 2010 (54.7).
  • New Business Activity sub-index also reached above 50 in August, up to 52.6 compared to 49.5 in July.
  • New Business 12mo MA is at 50.6 and this compares to same period MA in 2011 of 48.8 and same period MA for 2010 of 53.3. 3moMA is at 50.8 still below previous period 3mo average of 51.5.

You can see the moderating in volatility flat trend just above 50.0 for both series in the charts above that set in around April 2010. Good news, this is above 50.0. Bad news it is throwing fewer and fewer upside surprises. 

To the slight downside on the news front, New Export Business sub-index moderated growth signal from 55.7 in July to 54.1 in August, albeit this is still significantly above 50.0 line. I wouldn't call it a weak reading by any means, but a slippage in the rate of growth.
  • 12mo MA through August 2012 is at 53.5 against same period 2011 at 51.0 and 2010 at 54.6.
  • 3mo MA is now at 54.7 and this is an improvement on previous 3mo period of 54.1.
  • Overall trend is relatively strong here and is sustained, which is good news.

In the chart above another notable trend is in Employment, which registered sub-50 reading once again in August - for the fourth month in a row - at 49.1. The decline in employment sub-index, however was moderated relative to July reading of 48.3.
  • 12mo MA through August 2012 is at 48.2 which is virtually identical to same period average of 48.1 in 2011 and 2010.
Profitability also declined and is now at 42.9 - well into contraction territory. 

More on employment and profitability signals in subsequent posts.

Overall we have an improved performance in the Services sector in August, compared to May-July period, which is good news. Confidence is running high, rather too high (relative to actual activity levels), but that is relatively normal coming out of depressing three months around the end of Q2.

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