5/9/2013: Services PMI: August 2013

With a delay (due to extenuating circumstances) - here's my analysis of dynamics of the Services PMI for August for Ireland.

Yesterday's reading on Services PMI was spectacular by all measures:

• Headline  index rose to 61.6 in August 2013, the highest reading since February 2007 and 19th highest reading in history of the index.
• August reading marked the third consecutive month of index reaching statistically significant levels of growth.
• 12mo MA is now at expansionary 55.6, 6mo MA at 55.7 and 3mo MA at 58.0. These readings should signal a break in the third recessionary dip we have experienced.
• Current 3mo MA is solidly ahead of 3mo MA through May (53.4) and is ahead of same averages for 2012, 2011 and 2010.

The most critical bit, however, is that this is the first time now that the PMI has breached the levels consistent with the pre-crisis activity. This is not to say we are heading for 4.4-4.6% annual GDP growth, but it is significant nonetheless. 

All-in - very solid expansion, very solid reading and starting from actually high levels of activity to begin with.

We do not have - courtesy of Investec and Markit deciding to cut back the information they release to us, mere mortals - the actual composition details or the breakdown by sector. However, per Markit release, most of the growth is accounted for by booming IFSC. The overall Services PMI is very significantly skewed in the direction of MNCs (as I showed on a number of occasions).

7/7/2013: Services PMI for Ireland: June 2013

Necessity is a mother of all inventions. Necessity of recent commands that those of us who care to do an in-depth analysis of Irish data have to scale back analysis of the PMIs. The reason for this is that Investec and Markit are no longer publishing in a general release any relevant data concerning the PMIs components. In the case of Services PMIs, Markit went even farther:

All that is left for any non-profit analysts like myself is to take the few numbers still being reported on an ad hoc basis, and make most of them. Sad to see years of data & analysis models going to waste because Markit & Investec don't really understand how to work with new media and independent analysts.


Here is the updated trends analysis for Services Sectors PMI (my earlier post on Manufacturing PMIs is here):

• 12mo MA for the series stands at 54.0, which is statistically indifferent from 54.9 recorded in June 2013. 
• June 2013 reading is statistically significantly above 50.0, so no denying it, the sector is expanding.
• 3mo MA currently and 54.3, which is also statistically significantly different from 50.0, and is virtually unchanged on 54.2 3mo MA through March 2013.
• The 3mo MA through June 2013 (or Q2 2013 average) is ahead of same period 2012 (50.3), 2011 (51.0) and 2010 (52.9). All pointing in the good direction, then.

Charts below illustrate the trends:

Chart above shows that, despite the robust growth, we are in a secular slowdown in underlying growth when it comes to Services sectors. In pre-crisis period, average PMI ranged 7.6 points above 50.0, which was consistent with roughly GDP growth of 4.4-4.6 percent per annum. Since the 'recovery on-set, average PMI is above 50.0 by 1.9 points, which is not statistically significantly distinct from zero growth in the sector. it is also consistent with average GDP growth of ca 1.2-1.5% per annum.

Now, keep in mind: these are Services, heavily dominated by exports-driven ICT and Financial Services - in other words, this is the sector of the economy where the 'exports-led recovery' story has been the rosiest since the 'official' end of the crisis.

Stay tuned for my combined series analysis for Manufacturing and Services PMI.

Economics 23/05/2010: To Infinity & Beyond

As a harbinger of good news I bring to you all... Ah, what the hell, here is the announcement:
And actually this is the good news - Infinity is the leading international finance academic/practitioner conference in Ireland and it is great to see it back in town this year. It is a truly international venue (as in actually attracting real, not invited & paid-for, experts and speakers, with real - not imaginary or self-appointed - clout in global finance) and it carries hundreds of latest research papers with the focus on different areas of international finance.

Few notes of worth:

• Patrick Honohan will open the proceedings - Patrick, of course, has spoken at Infinity before, in his academic capacity, reviewing papers and presenting them. Two years ago he launched a session that introduced the book myself, together with Sharon Jackson and Colm Kearney edited and co-authored on the issue of Global Debt problems. He will, undoubtedly, engage with the audience of peers this time around.
• Bill Megginson, the University of Oklahoma will present on “The Value of Investment Banking Relationships: Evidence from the Collapse of Lehman Brothers”. We should ask him few questions as to his view of the Irish Government claims that Lehmans' collapse was responsible for our gravely ill banking sector, instead of the homemade hash of senile lending practices.
  
• Simon Stevenson, Director, Center for Real Estate Finance, City University London; Derek Brawn, Property Economist and Author; Peter Matthews, Banking Consultant and myself will be talking about Real Estate Finance - so expect myself and Peter getting stuck into long term effects of Nama on this vital (for Ireland Inc) sector, while Simon - one of the world's preeminent and prolific researchers in the area (and a good friend and co-author) - will be on hand to tie it all into international markets framework. Simon, by the way, has really first class knowledge of Irish markets as well - just one example of his recent work includes the paper that James Young and myself co-authored with him on property auctions in Ireland, forthcoming in the Journal of Housing Economics (number one venue for academic research in the field of property).
  
• Edward J Kane, Boston College, USA will speak about the “Post-Crisis Financial Reform as Denial and Coverup” - a salient topic given the current state of regulatory reforms proposals coming out of the EU. Judging by the strong title, this is not going to be one of them placid academic discourses on how to find a "balancing act" or "resolve the problems of injustice and equity in financial services"...
  
• On a practitioner interface side: “Investments in the Post-Crisis World” a roundtable organised by CFA Ireland and moderated by Aleksander Sevic of Trinity College Dublin, will be dealing with: “An Update on Latest Trends in Fund Offerings” by David Hammond, CFA, Bridge Consulting; “Major Challenges in Allocations to Irish and Emerging Markets’ Equities, Liquidity Risk and Product Innovation: The Perspective of a Pension Fund Trust” by Stephanie Condra, CFA, Invesco Pension Consultants; “An Update on Current Issues in the EU Government Bond Market” by Catherine McLaughlin, CFA, Irish Life;
  
• For those interested in CDS bond spreads - the hot potato in today's media and politicos discussions - Brian Lucey will be presenting a paper (in which yours truly is one of the co-authors) "CDS Bond Spreads among the PIIGS 2006-2010"

Ok, enough of praise singing - couple of links: programme for Infinity is available here. I intend to blog and twitter on it during the proceedings. I also intend to do one or two interviews with top participants - hopefully might convince Business & Finance to run something on this.


Finally, in a note of custom for this blog - Infinity is a fully self-financed conference, built on work of Brian Lucey, Linda Sorinton and others in TCD School of Business, excellent researchers like Elaine Hutson of UCD and many others. Many involved are co-authors in academic life, so all discussions are frank, open and usually free of agendas. Infinity has no reliance on subsidies of any sort. Unlike many other 'specialist' or 'futurist' conferences out there, richly sprinkled across Irish calendars. So no taxpayers funds will be harmed in the preparation of this event - an example of real academic sustainability!