5/6/2014: Irish Composite Activity indicator for Services & Manufacturing: May 2014

In the previous post, I covered Irish manufacturing and services PMIs on monthly frequency basis. Here, an update on quarterly (Q2 to-date) and composite series.

As chart above shows:

• Manufacturing PMI rose to 55.6 Q2 (to-date) against 53.7 in Q1 2014 and 49.3 in Q2 2013. These are solid gains. Still, some lingering doubts as to just how much growth can be read off this result. Q1 2014 reading was bang-on in-line with Q4 2013 (53.6) and as we know, Q4 2013 was a quarter of falling GDP.
• Services PMI rose to 61.8 in Q2 2014 (to-date) against 59.9 in Q1 2014 and 54.3 in Q2 2013. Again, solid gains.
• Composite PMI (this is not supplied by the Markit/Investec, but is computed by myself based on their data for Manufacturing and Services) rose to 60.3 in Q2 2014 (to-date) up on Q1 2014 reading of 58.4 and Q2 2013 reading of 52.8 (note: including Construction into Composite PMI generates virtually identical result).

Key takeaways:

1. Solid performance on Composite PMI reading. Q2 2014 to-date shows strongest growth since Q2 2006
2. Q1 2014 and Q4 2013 both showed strongest growth signals since Q1 2007.
3. Thus, by all readings in the last three quarters, Irish economy should be expanding in Q1 2014 and this expansion should have accelerated in Q2 2014.

8/5/2014: Irish Composite Activity indicator for Services & Manufacturing: April 2014

In the previous post I covered Irish Manufacturing and Services PMIs as released by the Investec/Markit. With both PMI indices out, time to update my own Irish Composite Activity Indicator (CAI) based on PMIs and showing a measure of aggregate economy-wide activity in private sector.

The CAI is based on quarterly (or closest 3mo average) readings for two PMIs.

Chart below illustrates the series.

Q2 2014 reading to-date is for CAI of 58.8 which is slightly up on Q1 2014 reading of 58.4 and is up 11.3% y/y. With Q1 2014 up q/q by 0.36% and Q2 (to-date) reading up 0.62% q/q, the pace of expansion is rising.

So far, in Q2 2014 we are marking 17th consecutive quarter of expansion in economic activity. Which, of course, stands contrasted by the fact that GDP posted 8 quarters of q/q declines over the last 16 quarters for which we have data, while GNP posted 7 quarters of contractions.

Basic point is the old one: PMIs have virtually no connection to either GDP or GNP.

Still, good feeling is worth something (which is why we are willing to pay to see soft-ball comedy and entertainment) and on this measure, CAI shines some warmish light on us all...