3/12/15: Irish Services & Manufacturing PMIs: November 2015

Markit released Irish PMIs for November. Here are the highlights:

Services Sector PMI for Ireland stood at 63.6 in November - a significant uplift on October 60.1 reading and the highest reading since September 2006. 3mo average through August 2015 stands at 62.9 while 3mo average through November 2015 is at 62.0. Irish Services sector activity has now been running PMIs above 60.0 (signalling an exceptionally high levels of growth) every month since February 2014. Which, basically, makes these numbers either unbelievable or reflective of heavy biases toward MNCs-led activities in the survey. Not that Markit seems to be concerned and certainly not its paying partners in releasing the survey - Investec.

Manufacturing Sector PMI for Ireland moderated marginally to 53.3 in November from 53.6 in October, pushing 3 mo average through November to 53.6 which is somewhat lower than 55.0 recorded over 3 months through August 2015 and 56.2 3mo average through November 2014.

As the chart below shows, Services and Manufacturing PMIs have both continued to signal strong growth in the economy, albeit the trends in two series have now diverged, starting around February 2015 when Manufacturing PMI trend turned toward toward signalling shallower rates of growth, while Services PMI trend turned more volatile and onto a relatively moderate upward path.

4/11/15: Irish Services & Manufacturing PMIs: October

Irish manufacturing and services PMIs have been released by Markit, covering October.

On Manufacturing PMI side, there has been some improvement in growth conditions in the manufacturing sector, with faster growth in new business, offset by softer production growth. IrishManufacturing PMI posted a reading of 53.6 in October, down marginally on 53.8 in September. Per Markit: “Business conditions have now strengthened in each of the past 29 months. The rate of expansion in manufacturing production continued to ease in October, the third successive month in which a slowdown has been recorded. The latest rise was the weakest since February 2014, but higher sales, in a number of cases from export markets, supported continued output growth.” In other words, MNCs activity is once again the suspect key driver for continued growth in the sector, not that Markit would say so outright.

On a 3mo average basis, 3mo average for the period through October stood at 56.1 - a hefty rise on the 3mo average through July 2015 that registered 53.7 and almost in line with 56.5 3mo average through October 2014. Over the last 6 months through October, the index average was down 1.5 points on the 6mo average through April 2015.

Meanwhile, on Services PMI side, October marked another month of rapid growth, although the rate of growth eased somewhat from dizzying highs of September. October Services PMI stood at a hefty 60.1, down on jaw-breaking 62.4 reading in September 2015. On a 3mo average basis, 3mo average through October 2015 was 62.7, up on 3mo average through July 2015 (61.5) and above the 3mo average through October 2014 (61.2).

Per Markit: “Although [October reading] signalled the weakest expansion in activity since February 2014, the rate of growth remained elevated as higher new business continued to lead to rising output.
Business sentiment remained strongly positive, with panellists predicting that new orders would continue to increase over the coming year, leading to further growth of activity. Improvements in wider economic conditions were also mentioned by those panellists forecasting higher output. That said, sentiment dipped to the weakest since August 2014. The rate of growth in new business eased further in October and was the weakest since March.”

As chart above shows, both services and manufacturing sectors continue to perform well ahead of historical comparatives, but on-trend in terms of growth balancing between two sectors. “Excess’ growth in Manufacturing, evident in October 2013 and 2014 data has eased, while accompanying moderation in growth in Services was somewhat weaker. Again, all indications are - exporting sectors are driving growth, dominated by MNCs, though domestic internal demand is also supporting expansion.

6/8/15: Irish Services PMI: July Mirage of Growth

Today, Markit released Services PMI for Ireland. Note: I have covered details of the Manufacturing PMI release link here.

On Services side, headline index reading in July was 63.4, which is marginally ahead of 63.3 registered in June. July reading was the highest in 109 months, after June posting the highest reading in 108 months.

Per Markit, "Panellists mainly linked the latest increase in activity to improving economic conditions." As I have shown in the past, the index is only now starting to re-couple with actual services activity indicators, suggesting that much of the PMI reading is biased by the specific, concentrated MNCs-led activity. Still, the PMI has now reached dizzying heights.

On another positive side, Services PMI boom is coinciding with Manufacturing PMI boom (also most likely driven by MNCs tax optimisation strategies):

But, as the next post details, real actual, CSO-measured activity in the Services sector was nowhere near all-time highs in growth in 1H 2015. In simple terms, PMI is telling us porkies, or PMI survey participants are telling Markit porkies, or both...

What is even more disturbing is that Manufacturing PMI figures are also in the territory of imagineering, where fair princesses and unicorns run through the fields of golden pansies with butterflies at their... ah, whatever... just take a look at the above chart and read this: http://trueeconomics.blogspot.it/2015/08/5815-irish-industrial-production-up.html.