19/9/15: Irish Construction PMIs: August 2015

Irish Construction Sector PMIs for August showed moderate de-acceleration in sector growth.

Per Markit:

On a 3mo average basis:

• Overall Construction Sector PMI stood at 60.4 in 3mo through August 2015, up on 57.8 for the 3mo average through May 2015, but down on same period a year ago (61.3).
• Housing Activity sub-index posted deterioration m/m. However, on a 3mo basis the index through August 2015 (58.7) was up on the 3mo average through May 2015 (56.5), but down on 3mo average through August 2014 (63.5).
• Commercial Activity sub-index posted deterioration m/m. On a 3mo basis the index through August 2015 (61.3) was up on the 3mo average through May 2015 (59.4), but down on 3mo average through August 2014 (62.4).
• Civil Engineering activity sub-index posted deterioration m/m and a reading sub-50.0 for the second consecutive month. On a 3mo average basis, 3mo average through August 2015 was at 50.1, identical to the 3mo average through May 2015 and up on 47.6 average through August 2014.

Thus, all sub-indices have deteriorated on a m/m basis, and all, with exception of Civil Engineering, posted deterioration y/y on 3mo average basis.

As shown in the chart below, two key sub-indices of construction sector activity remain above 50 mark, but a sharp deterioration in overall growth momentum for the second month in a row. Both sub-series are signalling potential reversal in the positive momentum trend from September-November 2014 on.

In Civil Engineering, a brief recovery momentum signalled in Q4 2014 has now been erased:

10/9/15: Building & Construction: 2Q 2015

Production indices for Building & Construction sector in Ireland, covering 2Q 2015, were out yesterday. Here is the run through the numbers:

All building & construction sector activity by volume rose to 106.2 in 2Q 2015, up 5.46% q/q and 7.16% y/y (I am using seasonally-adjusted basis numbers here).

Much of this increase was down to a 8.78% rise in Building ex-Civil Engineering, which was itself primarily driven by a 14.6% q/q uplift in Residential Building.

Two charts, showing links to Construction sector PMIs:

Charts above illustrate continued decoupling in trends between PMIs-signalled growth and actual activity in the sector. While PMIs have signal strong expansion, the rate of growth in actual activity has been much more modest. As the result, negative correlation between PMIs and CSO index has moderated, but it remains negative on a historical basis.

21/11/2014: Irish Property Markets: Not in Rude Health, Yet...

Four slides from my ICA presentation today, covering construction sector and property market in Ireland:

14/11/2014: Irish Construction Sector PMIs: A Bit Bubbly, A Bit Bonkers…

Ulster Bank and Markit published Construction PMI for Ireland, and the numbers signal huge uplift in activity across all sub-sectors, excluding Civil engineering. However, Civil Engineering post an above 50 reading (albeit consisted with virtually no growth) for the first time since Q1 2006.

So here we have it:

Total Activity PMI for Construction sector in Ireland rose to 64.9 in October, signalling huge rates of growth, despite few cranes being visible around. 3mo average through October is at 62.6 against 3mo average through July at 60.9. Similar rises were recorded in 6mo average through October. All of which suggests we should be seeing a massive boom. Of course we are not. Why? Because the levels from which the activity is rising are… well, microscopic.

Housing sub-sector PMI rose moderated slightly to 66.4 from the blistering 68.4 a month ago. 3mo average through October is at 66.17 against 3mo average through July at 62.57. Again, the above numbers would have signalled we are in a new bungalow blitz boom, except we are not. At least not yet.

Commercial sub-sector PMI hit 66.8 in October, a solid rise from already boiling 62.7 in September. 3mo average through October is at 64.23 which is up on 61.8 3mo average through July 2014.

Civil Engineering PMI came in at 50.6 in October, which is welcomed sign. Still 3mo average through October remains below 50.0 at 48.0 and that is a slight improvement on 3mo average through July (47.43).

Crucially, the improvement in the Civil Engineering sub-index pushed all sub-sectors to co-move as the table below shows:

It is worth remembering that Construction Sector PMIs seem to have little bearing to the reality in the sector activity on the ground as shown below, so it is worth taking these numbers with a grain of salt.

Just how bonkers is the above PMI data? Or just how much salt to be used with that fish:

Yep, historically, PMIs decline when activity expands and vice versa...