5/1/21: Ireland PMIs: 4Q 2020

Ireland's economic activity improved significantly in December, and the improvements were marked across all three sectors:

• Ireland's Manufacturing PMI rose 52.2 in November to 57.2 in December, marking the third consecutive month of > 50 readings, the second consecutive month of indicator being statistically above 50.0 line. The last three months average (53.23) is on 2Q 2020 average (53.30) and this is pretty encouraging, given the weakness in the indicator over 1H 2020. 
• Ireland's Services PMI also rose in December, reaching 50.1 from recessionary 45.4 in November. 4Q average is still weak at 47.9 (contractionary) after being effectively stagnant at 50.03 over 3Q 2020. Monthly increase in December, however, is a brighter spot.
• Ireland's Construction sector PMI (data through mid-December) is at 53.5, which is strong compared to month prior (48.6) and the first time the index is above 50 line since July 2020. 
• Official Composite PMI that accounts only for two sectors of activity (Manufacturing and Services) is now at 53.4, having broken above the 50.0 line for the first time since August 2020.

As you know,  I calculate my own index of economic activity based on all three sectors PMIs and using relative weights of each sector in Irish Gross Value Added, based on the latest National Accounts data. This is plotted against Markit's Composite PMI in the following chart:

Just as Composite PMI, my index of economic activity also rose in December (to 52.9) from 48.2 in November. This marks the first month of above-50 readings after 3 consecutive months of contraction. Nonetheless, 4Q 2020 index is at 50.03 - signaling zero growth q/q and this stands contrasted to 3Q 2020 reading of 51.2 (statistically zero growth, nominally, weak positive growth).

3/12/20: Ireland PMIs: November

 

Ireland PMIs are out for November and they show the impact of the re-amplification of COVID19 impacts on the economy.

Services PMI fell from 48.3 in October to 45.4 in November, the lowest reading in 5 months and the third consecutive monthly reading sub-50. The pandemic period average is now at 39.3.

Meanwhile, Manufacturing PMI rose from 50.3 in October to 52.2 in November, marking the second consecutive month of readings above 50.0 mark. Pandemic period average is now at 48.2. 

Construction sector PMI (through mid-November) is at 48.6 - marking third consecutive month of sub-50 readings.

As the chart below illustrates, Manufacturing is the only sector that is providing growth momentum in the economy and much of that is down to multinationals. In services sector, activity of multinationals (which are doing well) is more than offset by continued declines in activities of domestic enterprises. 

Composite PMI posted a third consecutive month of sub-50 readings at 47.7 down from 49.0 in October. Markit's Composite PMI is calculated based on manufacturing and services indices. To rebalance the overall activity measure to include construction PMIs, I calculate my own 3-sectors index which is based on each sector contribution to Ireland's gross value added. With economic activity shifting toward manufacturing during the Covid19 pandemic, this index is becoming more weighted to reflect manufacturing sector PMI, hence the 3-sectors index rose in November to 50.2 from 49.7 in October.

Overall, the PMIs and my 3-sectors index are all pointing to entrenchment of the Covid19 pandemic headwinds in the Irish economic activity in November. 

3/11/20: Ireland PMIs and Economic Activity Dynamics for October

October PMI data for Ireland is showing serious strains from the pandemic and wave 2 on the economic activity: 

• Manufacturing PMI for October came at a recessionary 48.3, marking a moderation on rapid contraction in the sector activity in September (45.8). This marks the second consecutive month of the Manufacturing PMI reading sub-50, and follows two months of partial (at best) recovery in July and August.
• Services sector PMI for October was at 50.3 - a statistically indifferent reading from zero growth 50.0 recorded in September.
• Official Composite PMI was at 49.0 in October, up on 46.9 in September, but still marking a decline in economic activity for the second month in a row. 
• Since Construction sector PMI is not published until mid-month, we only have September reading for the sector. Based on this, my three-sectors activity indicator that weighs all three sectors based on their contribution to the gross value added has rise to 49.05 from 47.48 in September:

Overall, all PMIs point to a significant weakness in the economy in September continuing into October. Keep in mind that PMIs are effectively cumulative: sub-50 reading in September implies a decline in economic activity relative to August. If this is followed by a sub-50 reading in October, the new decline is being signalled is on already diminished September activity.

3/10/20: BRIC: Manufacturing PMIs Q3 2020

 

Based on July-September data, here are the main takeaways from the BRIC Manufacturing Sector PMIs for 3Q 2020:

• Brazil Manufacturing PMIs gained serious speed in 3Q 2020 compared to 2Q 2020, rising from a recessionary reading of 42.0 in April-June to signal rapid recovery at 62.6 over the last three months through September. This marks the highest quarterly reading on record for the country Manufacturing sector. Dynamically, growth accelerated in every month since the start of the sector recovery in June 2020.
• Russia Manufacturing PMI came in at a disappointing and contractionary 49.5 in 3Q 2020, marking the fifth consecutive quarter of sub-50 readings, although still an improvement on the pandemic period low of 39.0 set in 2Q 2020. Adding pressure to the already poor performance, monthly PMI reading slumped from a relatively weak recovery signalled by PMI at 51.1 in August to a recessionary reading of 48.9 in September. 
• India Manufacturing PMI rose from 52.0 in August to 56.8 in September, with 3Q 2020 reading at 51.6 - a substantial but likely incomplete recovery on the pandemic low of 35.1 set in 2Q 2020.
• China Manufacturing PMI rose from 2Q 2020 reading of 50.4 to 3Q 2020 reading of 53.0, implying almost a full recovery in the manufacturing sector on 1Q 2020 pandemic period trough of 47.2. September marked a fifth consecutive month of PMI readings above 50.0. 

Overall, BRIC weighted Manufacturing Activity Index (based on monthly PMIs) stood at 53.0 in 3Q 2020, up on 45.0 in 2Q 2020 and 49.1 in 1Q 2020. Current reading signals the fastest q/q growth in the sector since 1Q 2011. The ongoing recovery across the BRIC economies is faster than Global Manufacturing PMI recovery (at 51.6), albeit highly uneven and somewhat suspicious. The core driver for this growth is Brazil, where manufacturing data dynamics is completely out of touch with services data dynamics and looks extremely unreliable.