5/6/21: Ireland PMIs for May: Booming Growth and Inflation Signals

 Both inflationary pressures and economic activity indicators are going through the roof in May, signaling a roaring run for 2Q 2021 growth. 

• Manufacturing PMI for Ireland is up at 64.1 in May, compared to 60.8 in April. This is a historical high for the series, for the second month in a row.
• Services PMI for Ireland moved up from April's 57.7 to May reading of 62.1. This marks third consecutive month of above 50 readings, with all of these being statistically above 50.0 line. 
• Construction Sector PMI (data through mid-May) improved, but remains (at 49.3) still in the contracting activity territory. 
• Markit's Composite PMI, based on Manufacturing and Services sectors activity indices, rose from 58.1 in April 2021 to 63.5 in May, setting a new all time high. Again, this is the third consecutive month of above 50.0 readings for the Composite PMI.

The chart above plots my own 3-Sectors Activity Index which is based on all three indices reported by Mrkit and uses Value Added contributions by each sector as weights. 3-Sectors Activity Index rose from 58.69 in April to 62.58 in May, setting an all time high. 

In line with robust economic growth, we are witnessing - just as is the case around the world - continued build up of inflationary pressures. Per Markit release: "Input price inflation accelerated for the fifth successive month in May, reaching the highest since July 2008. Manufacturers continued to see much steeper increases in input prices than service providers, although the differential narrowed in the latest period. Companies passed on higher costs to customers, with output prices increasing at a record pace in May (since September 2002)." Emphasis is mine.

26/8/20: Germany's Exports Expectations: Some Bad News

 ifo Institute's latest exports expectations for Germany are out and the data is quite interesting:

Firstly, expectations moderated in August, compared to July, although on balance, there are still more positive sentiment responders as opposed to the negative ones. This moderation is surprising, because of the sharpness of prior COVID19-related collapse and because August saw more global relaxation of COVID19 restrictions. 

Secondly, it appears that expectations for exports growth are now starting to revert back to pre-COVID19 'norm' of anaemic growth. This can be best seen by looking at longer term expectations data:

For those nostalgically inclined, 2019 was a woeful year for global trade, as reflected in the 2019 average in the chart above. And this was before COVID19 pandemic. In fact, exports outlook has been deteriorating from around mid-2018, on. 

A return to the pre-COVID19 'normal', if confirmed, is not the good news, given that German exports did not recover from the knock-down they sustained during the COVID19 pandemic.