7/3/15: Irish Services Sector Activity & PMI: January 2015

Irish Services Activity Index for January came out yesterday, offering some interesting data reading.

Contextually: Services PMI has averaged 62.2 in the 3 months through February 2015 and it averaged 61.9 for the period of 3 months through November 2014 - both showing blistering growth in the sector.

Now, January Services Activity Index came in 12.6% ahead of the same level in January 2014. 2 mo average through January (comparative to PMI averages we have) is 119.6 which is 9.44% ahead of 3mo average through the same period of 2014. This is rapid growth and it accelerated in December-January as chart below shows.

The acceleration was broadly-based:

• Information and Communication sub-sector activity rose 21.2% y/y with a massive 10.2% jump in m/m terms in January alone. The sub-sector growth rate is around 8.11% y/y in terms of 3mo average through January.
• Professional, Scientific and Technical sub-sector activity posted a big 14.0% jump y/y in January and was up 11.8% m/m. 3mo average through January was up 13.1% y/y.
• Wholesale and Retail Trade etc sub-sector activity rose 8.8% y/y and 9.5% m/m - also strong growth, although 3mo average through January was up weaker 7.2% y/y.
• Transportation and Storage sub-sector activity rose 8.4% y/y but was down 1% m/m, having previously posted rapid growth in November and December. 3mo average through January 2015 is up 16.5% y/y.
• Accommodation and Food services activity was up 14% y/y and down 0.33% m/m in January, with 3mo average through January 2015 standing 13.9% above 3mo average through January 2014.
• Administrative and Support services activity rose only 2.9% y/y and was down 0.8% m/m, with 3mo through January 2015 up just 2.1% y/y.

So, in summary - January figures show a very surprising (and thus suspicious) jump in overall activity across a number of sectors. CSO provides no explanation as to this jump nor any warnings on it. My suspicion is that we are seeing the effects of the infamous 'knowledge development box' introduction in Budget 2015 with MNCs pushing forward more aggressive tax optimisation strategies through it, whilst maintaining previous tax arrangements. I will post a small note on this later, so stay tuned.


Now, an update of the validity of PMIs as a measure of Services Activity recorded in the sector. Table below shows correlations between Services Activity Indices and Services PMIs

As the table shows, there is very little relationship between Services PMIs performance (I also did same analysis for rates of change in the indices that show even worse performance for PMIs as indicators of current or future actual activity) and actual Services sector activity. Out of 84 correlations, 53 are either negative of statistically zero and only 13 have strong positive correlation with either levels of activity or growth in activity. Crucially, PMIs perform stronger (relatively speaking) in correlations with levels of activity, rather than growth rates in activity (in which they perform absolutely disastrously across all time horizons and lags). About the only areas where PMIs are useful in relating to the level of activity (but not growth in activity) are: strongly with ICT, weakly with Admin & Support services and overall Services. Which suggests strong bias in PMIs toward MNCs-dominated ICT services sub-sector. Another miserable point for PMIs: they are more indicative of contemporaneous activity than providing insight into future activity.

8/9/2014: Some Pretty Good Services Data from Ireland

Irish services sectors have been at the forefront of the latest recovery for over two years now, posting booming figures and rosy PMIs. Underlying trends, however, are less often voiced. So let's take a look at the latest data here:

Overall, by value indices, Irish Services sectors posted a reading of 113.2 in July 2014, which is 1.34% up m/m. In previous month, June, m/m rate of increase was 1.45% which suggests slower growth in the sector overall. However, taking longer-range reading provides for a more encouraging picture. 3mo average through April 2014 was up 2.23% compared to same period 2013 and this rose in the 3mo period through July 2014 to 3.20%. 6mo average through July 2014 is also robustly up: +2.72% y/y.

So the above are encouraging trends and visible in the following chart:

As per composition of Services:

• Wholesale Trade services rose 1.42% m/m in June 2014 but fell 7.10% in July. Volatility aside, 3mo average through April 2014 was up 4.07% y/y and 3mo average through July was up 3.04%, while 6mo average was up 3.54% y/y. All healthy figures even though volatility is worrying.
• Combined Wholesale and Retail Trade sectors, however, were performing slightly less encouragingly. In June 2014, m/m growth was 0.27% and in July this fell to -0.27%. Again, monthly fall-off is down probably to heavy declines in Wholesale Trade area. But 3mo average through April 2014 was up 4.02% y/y and in 3 months through July this fell to 1.8% - a much more significant decline in growth compared to Wholesale trade alone. 6mo average through July was up 2.89% y/y which is again weaker than 3.54% for Wholesale Trade alone.
• Transport and Storage posted zero growth in July 2014 in m/m terms, having posted growth of 1.67% m/m in June. 3mo average through April 2014 posted a y/y decline of 1.96% and 3mo average through July posted a rise of only 0.88% y/y, which means that 6 months average through July was down 0.53% on same period in 2013.
• Accommodation and Food Services activity posted a significant m/m decline of 4.22% in June but managed a small comeback of 0.67% in July. Still, 3mo average through April 2014 was up 3.89% y/y and this moderated to 2.28% growth y/y in 3mo period through July 2014.
• Information & Communications Services sub-sector is booming. Up 3.73% m/m in June, followed by a rise of 3.52% m/m in June. The sector activity was up 6.88% y/y in 3 months through April 2014 and is now up 9.9% y/y in 3 months through July 2014. Much of this is down to MNCs booking massive revenues through Ireland on their way toward tax optimisation.
• Professional, Scientific and Technical Activities sector posted a disappointing m/m rise of just 0.62% in May-June 2014, but followed this with a strong 4.03% rise m/m in July 2014. Still, the sector 3mo average activity through April was down 9.35% y/y and it is down 2.17% for the 3 months through July too. The knowledge is not booming, apparently, in the Smart Economy.
• Administrative & Support Services - another backbone of the ICT services sector and international financial services as many of jobs in the MNCs operating from here have more to do with administration and sales - posted a rise of 1.80% m/m in July 2014 which is an improvement on 1.16% growth in June 2014. The sector is now down 1.85% y/y on the 3mo average basis through July 2014 and is down 0.74% y/y for 6 months through July.

Charts below illustrate trends:

Lastly, a summary of 3mo average moves, with current referencing period of May-July 2014 and previous referencing February-April 2014 period:

All in, the numbers are getting positive, and we have now much greater convergence between the Services PMIs and Services Index performance, suggesting that recent uptrend in Services PMIs (http://trueeconomics.blogspot.ie/2014/09/392014-services-pmi-for-ireland-august.html) is going to lead to continued uptrend in actual sector activity.

8/2/2014: Irish Services Sector Activity: FY 2013

In the previous posts I covered:
Monthly data for Irish Services Index for December 2013: http://trueeconomics.blogspot.ie/2014/02/822014-services-index-monthly-series.html, and
Quarterly series:
http://trueeconomics.blogspot.ie/2014/02/822014-q4-2013-data-on-services.html

Now, time to update full year figures for 2013.

First, y/y changes between 2012 and 2013:

Main point - even with 5.7% annual growth in ICT services and 22.3% growth in Administrative and support services, overall services sectors expanded by only 0.9% in 2013. Do note, this is a value index, so inflation is factored in too.

But what about longer term growth? Sadly, we only have comparable data from 2009 on. So here are the changes between 2009 and 2013, cumulative:

And two main drivers in the above are ICT services (remember those MNCs that book activity taking place across Europe into Ireland, as if Irish operations produced them?) and Wholesale Trade services (now exhausted and falling 6% y/y in 2013). In other words, nothing really is growing over the long range.

And with this, over the last 4 years, cumulated growth in all services recorded was just 3.5%. Inflation alone exceeded this by almost double.

But things are getting better, right? Growth is returning? Right? Here's a chart comparing growth in 2012 compared to 2011 and in 2013 compared to 2012. The positive values are where growth conditions improved, negative - where they deteriorated:

No comment.

8/2/2014: Q4 2013 data on Services Activity in Ireland

In the previous post I covered some top-level data for Irish Services Index for December 2013: http://trueeconomics.blogspot.ie/2014/02/822014-services-index-monthly-series.html

As promised, we now shall take a look at the data on quarterly basis, stripping out some volatility in the monthly series. Note, all data below references seasonally-adjusted series.

In Q4 2013, compared to Q3 2014:

• Wholesale Trade activity shrunk 1.71%, pushing y/y drop to 5.85% which is worse than the 4.54% annual drop recorded in Q3 2013. The sector reading is the lowest since Q4 2010.
• Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles sector activity fell 5.89% in Q4 2013 compared to Q3 2013, and there was an annual drop of 7.95% in Q4 2013, much worse than 0.19% decline recorded in Q3 2013. The sector is at the lowest reading for any quarter since Q3 2011.
• Transportation & Storage sector activity fell 5.73% in Q4 2013 compared to Q3 2013, and there was an annual drop of 4.47% in Q4 2013, much worse than a rise of 1.34% recorded in Q3 2013.
• Accommodation and Food Services sector activity rose 3.73% in Q4 2013 compared to Q3 2013, and there was an annual rise of 1.34% in Q4 2013, much better than a 3.6%% decline recorded in Q3 2013. The sector reading is at the highest level since Q3 2012
• In the above, Food services sector activity rose 4.89% in Q4 2013 compared to Q3 2013, and there was an annual rise of 5.27% in Q4 2013, much better than 0.99% decline recorded in Q3 2013.
• Also in  the above, Accommodation services activity rose 6.29% in Q4 2013 compared to Q3 2013, and there was an annual rise of 0.83% in Q4 2013, much better than 6.93% decline recorded in Q3 2013.

In the above chart:

• ICT sector activity rose 1.96% in Q4 2013 compared to Q3 2013, and there was an annual rise of 1.96% in Q4 2013, much worse than 4.45% rise recorded in Q3 2013.
• Professional, Scientific and Technical services sector activity fell 3.26% in Q4 2013 compared to Q3 2013, and there was an annual drop of 12.38% in Q4 2013, much worse than 5.16% decline recorded in Q3 2013. The sector hit its historical low in Q4 2013.

Now, to the last bit:

• Administrative and support service activities sector rose 0.96% in Q4 2013 compared to Q3 2013, and there was an annual rise of 20.94% in Q4 2013, compared to 21.77% rise recorded in Q3 2013
• Overall services activity fell 2.23% in Q4 2013 compared to Q3 2013, and there was an annual fall of 2.69% in Q4 2013, compared to a rise of 2.19% y/y recorded in Q3 2013.

And summary of q/q changes for Q4:

So decent news on Accommodation and Food sector side, poor growth on ICT services side and for Admin and backoffice side, and outright shrinking on all other sectors...

Annual data summary next.

8/2/2014: Services Index: Monthly Series December 2013

CSO released cheerful headlines for Irish Services Index, measuring activity in the largest part of the Irish economy.

Here's from the CSO release: "The seasonally adjusted monthly services value index increased by 1.3% in December 2013 when compared with November 2013 and there was an annual decrease of 1.5%."

Oops… things are up m/m and down y/y. But obviously the headline reads only the former, none of the latter.

"On a monthly basis, Information and Communication (+5.4%), Professional, Scientific and Technical Activities (+3.5%) and Administrative and Support Service Activities (+2.3%) showed increases when compared with November 2013.    Other Service Activities (-3.2%), Transportation and Storage (-1.6%), Accommodation and Food Service Activities (-1.1%) and Wholesale and Retail Trade (-1.0%), decreased when compared with November 2013."

Spot the problem? Controlling for ICT services (wait till Yahoo washes all its tax arbitrage through Dublin next) the only tangible, value-added activity that rose was Professional, Scientific and Technical Activities. We have no idea what drove this, but a rise here, excluding insolvency and mortgages arrears-related services and collection agencies would be helpful.

You really have to look at annual basis decomposition to see what is happening in the economy, though: "On an annual basis, Administrative and Support Service Activities (+27.7%), Information and Communication (+4.0%) and Accommodation and Food Service Activities (+2.4%) increased when compared with December 2012." That was is for increases: more paper pushing across tables, more back office supports and more adjoining ICT services. On the other hand, the rest of services are tanking: "Professional, Scientific and Technical Activities (-9.1%), Wholesale and Retail Trade (-8.2%), Transportation and Storage (-6.8%) and Other Service Activities (-6.5%) decreased when compared with December 2012."


So let's illustrate the above 'trends' in a few charts.

 Do keep in mind that, ex-ICT services, the Professional, Scientific and Technical Activities are our 'knowledge economy'. The trend here is down, down and down.

But now for the services sector overall:

The trend above is clearly showing a marked slowdown in activity in Q3-Q4 2013, just when we were being fed a steady diet of 'Things are Only Getting Better'. Am I missing something here? With all the ICT Services booming and all the Admin and Backoffice activities rising, we were supposed to get a strong retail season and a hopium-filled boost to domestic services too... But, apparently, we are having trouble recording these magnificent increases in the data?.. Oh, and do note, the data is in value terms, so inflation here is helping to push 'activity' up.

And the PMIs were booming too, for Services, just as the services activity was slipping?..


Next post will take a deeper look at the dynamics, controlling for monthly volatility. Stay tuned.

5/12/2013: Irish Services Index, October 2013

So Services PMIs are booming… they are positively booming…

…while in the real world, per CSO:

"The seasonally adjusted monthly services value index decreased by 1.4 % in October 2013 when compared with September 2013 and there was an annual decrease of 1.2%."

M/m on September 2012:

• Accommodation and Food Service Activities (+1.6%) 
• Wholesale and Retail Trade (+0.8%) 
• Professional, Scientific and Technical Activities (-6.0%), 
• Other Services Activities (-3.5%), 
• Transportation and Storage (-2.9%), 
• Information and Communication (-2.5%) and 
• Administrative and Support Service Activities (-0.3%) 

On an annual basis to October 2012:

• Administrative and Support Service Activities (+15.4%) 
• Information and Communication (+0.9%) 
• Professional, Scientific and Technical Activities (-14.3%), 
• Other Service Activities (-7.0%), 
• Transportation and Storage (-3.0%), 
• Accommodation and Food Service Activities (-2.0%) and 
• Wholesale and Retail Trade (-0.8%)  

Oh, and do notice the 'Smart economy' bits... the Professional, Scientific and Technical Activities down -6.0% m/m and 14.3% y/y. And the area of growth in employment known as Accommodation and Food Service Activities down -2.0% y/y... this data is bizarre and will require confirmation once we have full quarter results to make any sense of... but one thing is clear: Irish Services PMI is just not that good at measuring anything that registers as Services sector in Ireland.

5/9/2013: Irish Services Sector Activity Index: July 2013

Monthly Services Activity Index from the cSO is out for July. Some interesting movements in the series.

• Wholesale and retail trade sub-sector activity expanded m/m on seasonally adjusted basis by 2.46% in July 2013, having posted a m/m decline of 1.49% back in June 2013. 3mo MA through July 2013 was down 2.19% on 3mo MA through July 2012 and 6mo MA is down 4.21% y/y.
• Transport and storage sub-sector posted a m/m expansion of 1.86% in July 2013, following a contraction in June 2013 of 2.08%. 3mo MA is up 3.84% y/y and 6mo MA is up 4.36%.

• Accommodation and food services sub-sector activity contracted 0.76% in July 2013 m/m, having posted an expansion of 1.06% in June 2013. 3mo MA is now up just 0.32% y/y and 6mo MA is up 1.27% y/y.
• Administrative and support services sub-sector activity shrunk 1.24% m/m in July 2013, having posted 5.25% growth in June 2013. 3mo MA is now up a massive 23.76% y/y and 6mo MA is up 22.04%.

• Information and communication sub-sector activity shrunk 4.01% m/m in July 2013, having posted growth of 1.71% in June. 3mo MA is now up 8.01% y/y and 6mo MA is up 9.23% y/y.
• Professional, scientific and technical activities sub-sector is down 4.68% m/m in July, having posted an 1.74% expansion in June. 3mo MA is down 6.64% y/y and 6mo MA is down 3.23% y/y. 

Lastly, overall index:

• Services sector activity fell 0.82% m/m in July after posting growth of 0.37% m/m in June 2013.
• 3mo MA through July 2013 was up 2.73% y/y against previous 3mo period MA growth of 2.09% y/y.
• 6mo MA is up 2.41% y/y.

 Overall, still solid performance in the Services sector, with monthly (seasonally adjusted) changes not exactly stellar, but gains of the previous months continue to carry the sector to annual expansion.

4/7/2013: Irish Services Sector Activity Index: May 2013

Irish Services Index for May was out today, so here are the updated trends.

Wholesale Trade activity rose from 114.7 to 116.7 between April and May 2013, with index up 1.74% m/m having posted a 7.9% rise m/m in April. 3mo average through May 2013 is down on 3mo average through May 2012 by some 7.45% and 6mo average through May 2013 is down 6.47% y/y. Thus, two last months' readings are encouraging, but not yet enough to reverse overall slower activity recorded y/y.

Wholesale and Retail Trade and Repair of Motor Vehicles etc sector activities also improved m/m in May 2013, rising 1.22% after posting a 3.61% rise m/m in April. 3mo average through May 2013 is down 5.27% y/y and 6mo average through May 2013 is down 4.22% y/y. Relative to historical max (history here references period from January 2009), the index is still down 4.27%

Transport and Storage sector is up 1.49% m/m in May 2013 having posted a 1.06% increase in April 2013. 3mo average through May 2013 is up 5.79% y/y and 6mo average is up 6.62% y/y. Relative to historical max, the index is down 5.84%.

Accommodation and Food services activity dipped 0.58% m/m in May, having recorded a 3.38% drop in April. 3mo average through May is still up 1.40% y/y and 6mo average is up 1.72% y/y. The sector is down 17.78% on peak for the period from January 2009.

Administrative & Support services activity rose 0.68% m/m in May, having recorded a 2.42% rise in April. 3mo average through May is still up 20.67% y/y and 6mo average is up 18.06% y/y. The sector is currently at a peak for the period from January 2009.

Information & Communication services activity dipped 3.23% m/m in May, having recorded a 2.11% drop in April. 3mo average through May is still up 10.31% y/y and 6mo average is up 7.72% y/y. The sector is down 5.28% on peak for the period from January 2009.

Professional, Scientific and Technical services activity dropped 4.40% m/m in May, having recorded a 0.11% decline in April. 3mo average through May is down 3.72% y/y and 6mo average is down 4.34% y/y. The sector is down 35.0% on peak for the period from January 2009.

Overall services sector activity declined 0.74% m/m in May, having recorded a 1.21% expansion in April. 3mo average through April 2013 was up 1.83% y/y and this improved to 2.31% growth for 3mo average through May 2013. 6mo average through May 2013 was up 1.72% y/y. Relative to peak, overall services activity is down 1.64%.

11/6/2013: Irish Services Index: April 2013

Good news is: on an annual basis, per CSO, in April 2013:

• Administrative and Support Service Activities rose +21.3%, 
• Information and Communication went up +15.4%, 
• Other Service Activities +4.2%, 
• Transportation and Storage +1.4% and 
• Accommodation and Food Service Activities (+0.3%) increased 

On bad news front:

• Wholesale and Retail Trade were down -4.2% and 
• Professional, Scientific and Technical Activities fell -0.6%.

The seasonally adjusted monthly services value index increased by 1.2% in  April 2013 when compared with March 2013 and there was an annual increase of 4.1%.

As you would know, I am not covering Services PMIs anymore, as these are no longer being released in any useful data format (Markit has decided to exclude reporting of actual levels of sub-components for PMIs, preferring to practically give instead its analysts personal opinion about these levels). 

However, I will continue reporting CSO data.

So here's more detailed analysis:

• Wholesale Trade sub-index rose from 106 in March to 114.1 in April, marking a 7.64% rise m/m and a decline of 4.68% y/y. 3mo MA through April 2013 stood at 110.23, down on 116.67 3mo MA through January 2013 and down sharply on 122.07 3mo MA through April 2012. 6mo MA through April 2013 is at 113.45, down on 121.10 6mo MA through April 2012.
• Wholesale and Retail Trade, repair of vehicles sub-index improved from 102.3 in March 2013 to 105.7 in April 2013 (+3.32%), but the index is down 4.17% on April 2012. 3mo MA through April 2013 is at 104.3 against 3mo MA through April 2012 at 111.27; 6mo MA through April 2013 is at 106.32 against 6mo MA through April 2012 at 110.80.
• Transport & Storage sub-index is at 113.4 in April 2013 up marginally (+0.62%) m/m and up 1.43% y/y. 3mo MA through April 2013 is at 111.83 up on year ago 3mo MA of 106.83. 6mo MA through April 2013 is at 111.18, up on 6mo MA through April 2012 at 106.73.

• Accommodation & Food Services slipped from 105.9 in March 2013 to 102.7 in April 2013 (-3.02%) and the index is up only 0.29% y/y. 3mo MA through April 2013 is at 103.2, which is up on 3mo MA through April 2012 at 101.2. Similarly, 6mo MA through April 2013 is at 103.77 which is up on previous year level of 101.3.
• Much of the improvements in the above sector was driven by rising value of food services, up 3.51% y/y. Accommodation services actually fell 1.35% y/y and were down 9.07% m/m.
• Administrative and support services activity also improved m/m (+1.66%) and rose strongly by +21.31% y/y. Huge gains were recorded in the activity on 3mo MA basis y/y and 6mo MA y/y basis. I have no explanation to this other than possibly reclassification of some activities into this category, plus boom in on-line services centres in Dublin (much of google and other ICT services firms activities here relate to support and admin, rather than R&D or professional work).

• ICT services continue to boom, rising 15.42% y/yin April, although slipping 1.59% m/m from the historical record-breaking levels in March 2013. on 3mo MA basis, April 2013 stood at 122.13 strongly up on previous year levels of 109.87. On 6mo MA basis, April 2013 came in at 120.42, up on 110.42 a year ago.
• In contrast to ICT services and Admin services, Professional, scientific and technical activities index declined for the third month in a row, falling to 91.0 in April 2013 from 91.2 in March 2013 (-0.22%) and is marginally lower (-0.55%) y/y. 3mo MA through April 2013 is at 91.4 and it is virtually flat on 3mo MA through April 2012 (91.2). 6mo MA through April 2014 at 91.0 is down on 94.5 6mo MA through April 2012.

• Overall Services sector activity index rose 1.21% m/m from 107.7 in March 2013 to 109.0 in April 2013, and is up 4.11% y/y. 3mo MA through April 2013 is at 107.63 which compares marginally positively against 105.4 3mo MA a year ago. 6mo MA through April 2013 is at 107.62, also marginally up on 105.47 6mo MA through April 2012. However, 3mo MA through April 2013 was identical to 3mo MA through January 2013, implying zero growth, and 6mo MA through April 2013 was slightly ahead of 6mo MA through October 2013 (107.6 relative to 105.9).

7/5/2013: Irish Services Index, Q1 2013 data

Irish Services Index is out today for Q1 2013 and here are some details (monthly data analysis to follow). Keep in mind, data only starts from Q1 2009, so when referencing current levels of activity to peak, that refers to peak from Q1 2009 and not relative to pre-crisis activity.

• Value in Wholesale & Retail Trade, Repair of Motor Vehicles & Motorcycles sector declined in Q1 2013 to 105.2 q/q (down 3.22% from 108.7 in Q4 2012) and is down 5.40% y/y. Q4 2012 value index was down 1.36% y/y, so things are getting worse faster. Relative to peak (since 2009 Q1 data start) the index is now down 5.40%. 
• Value index for Transportation and Storage sector slipped marginally from 110.5 in Q4 2012 to 110.0 in Q1 2013 (-0.45% q/q) and is up 5.97% y/y. However, rate of annual growth declined in Q1 2013 compared to Q4 2012 when it stood at 8.97%. Relative to peak the index is still down 9.39%.
• Accommodation and food services activities index also slipped marginally from 104.7 in Q4 2012 to 104.3 in Q1 2013 (down 0.38% q/q). Y/y index is up 3.48% in Q1 2013 and this is a slight gain on 3.05% y/y growth in Q4 2012. However, relative to peak index reading is still down 14.86%.

• Information and communication sector index remained practically flat in Q1 2013 in q/q terms at 116.6 which is only 0.09% up on 116.5 in Q4 2012. Y/y index is up 3.83% and this shows deceleration in growth from +8.47% growth posted in Q4 2012. Despite this, Q1 2013 marks the peak of activity in this sector for any quarter since Q1 2009.
• In contrast with ICT sector activity, the knowledge economy core services sub-sector, Professional, scientific and technical activities index has suffered steep declines since 2009. In Q1 2013 the index stood at 91.2 (up 0.22% q/q) up only 0.55% y/y. This marks a minor reversal of a significant decline of -8.36% recorded in 12 month through Q4 2012. The index is down massive 29.14% on peak.

• Administrative and support service activities index has been a surprising performer during the crisis. In Q4 2012 it stood at 104.7 and Q1 2013 this increased to 110.4 a gain of 5.44% q/q. Index is now up 20.92% y/y and this compounds 11.38% y/y growth recorded in Q4 2012. Q1 2013 marks the peak quarter on record for the sub-sector.
• Overall services index slipped from 107.2 in Q4 2012 to 106.2 in Q1 2013 (-0.93% q/q), although activity is still up 0.85% y/y. Y/y growth in Q1 2013 marks a slowdown from 2.19% y/y expansion in Q4 2012. The index overall is 0.93% below the peak and is currently running slightly behind the level of activity recorded in Q1 2009.

Overall, quarterly data shows weakening in Services sectors performance, and stripping out the effects of ICT (dominated by tax transfers-booking MNCs), Services side of the economy is showing weaknesses that are alarming. Recall that exports of services growth in 2010-2012 acted to compensate for declines in domestic demand and weaker growth (turning negative) in exports of goods. Should Services activity continue to suffer even modest declines, our GDP and GNP growth will be impaired. 

To see more forward-looking data, read my analysis of Services PMI for April: http://trueeconomics.blogspot.ie/2013/05/352013-irish-services-pmi-april-2013.html

7/4/2013: Irish Services Activity Index - February 2013

Irish Services activity fell in February 2013 per latest CSO data, marking second consecutive month of decline. In February 2013, Irish services index dropped 1.03% m/m and was down 0.45% y/y. The index 3mo MA is now at 106.43, only slightly ahead of 106.07 in 3mo period through November 2012, and still ahead of 105.43 3mo MA through February 2012. The same dynamics are repeated at the 6mo MA level.

Largest m/m declines were recorded in Wholesale Trade (-7.17% m/m and down 10.71% y/y), Accommodation & Food Services (-1.89% m/m and down 0.69% y/y). Largest m/m increases were in Administrative & Support Services (+2.95% m/m and up 15.74% y/y) and in Professional, Scientific & Technical Activities (+1.68% m/m and 2.02% y/y). 

In annualised terms, largest increases were recorded in Administrative & Support Services (+15.74% y/y), Accommodation Services (+6.92% y/y) and Transport & Storage (+5.61%).

One interesting point in terms of longer range analysis:

As chart above shows, the PMI data for Services Activity continues to bear no relations to the actual Services Activity Index measurements. Recall that in January and February, Services Activity Index posted two consecutive declines in activity. Over the same months, PMI for Services posted robust growth signals at 56.8 in january and 53.6 in February.

11/3/2013: Irish Services Activity: January 2013

In an earlier post I covered annual figures for Services Index for Ireland (link here). Today's release from CSO also provides data for January 2013 (monthly series) and here is the detailed analysis of shorter-term series.

• Wholesale Trade activity index rose in January 10 118.8 from December 2012 level of 115.2 (+3.13% m/m). The index is down 1.49% y/y. 3mo average is at 117.23 up on previous 3mo average of 115.93, but down on 3mo average through January 2012 which stood at 120.47. 6mo average is 116.6 against previous 6mo average of 120.9 and a year ago 6mo average of 119.9. Thus, at 3mo average activity through January 2013 is slower than through January 2012. Ditto for 6mo average.
• Wholesale & Retail Trade, Repair of Motor Vehicles and Motorcycles activity index increased to 108.9 in January 2013 - up 1.02% m/m, but down 1.27% y/y. 3mo average through January 2013 is static compared to 3mo average through October 2012 and is down on 3mo average through January 2012. 6mo average through January 2013 is down on 6mo average through July 2012 and down on 6mo average through January 2012. Slowdown in the broader category, therefore, is more pronounced and stretched over the last 12 months than in Wholesale Trade alone.
• Transport & Storage services activity index dipped from 112.1 in December 2012 to 111.5 in January 2013, a decline of 0.54% m/m. However, the index is up 10.29% y/y. 3mo average is statistically indifferent in 3mo through January 2013 (111.3), as in 3 mo through October 2012 (111.9), but is significantly ahead of 3mo through January 2012 (101.2). 6mo average through January 2013 (111.62) is ahead of 6mo average through July 2012 and ahead of 6mo average through January 2012.
• Accommodation & Food services index declined in January 2013 to 103.5, down 1.33% m/m and marked second consecutive monthly decline. The index is up 2.38% in y/y terms. 3mo average through January 2013 is at 104.6, which is lower than 3mo average though October 2012 (105.63) but above 3mo average through January 2012 (101.6). On 6mo average basis activity through January 2013 was ahead of activity through July 2012 which itself was ahead of activity in 6 months through January 2012.
• Information & Communication services activity declined in January 2013 from 121.7 in December 2012 to 119.8 (decline of 1.56% m/m) although activity was strongly up (+11.76%) on January 2012. 3mo average through January 2013 was at 118.7, well above 3mo average through October 2012 (112.23) and 3mo average through January 2012 (108.43). Similar increases are traceable to 6mo averages.
• Professional, Scientific & Technical activities index rose to 90.2 in January from 89.4 in December 2012 (+0.89% m/m) although the index is down 1.85% y/y. 3mo average through January 2013 is at 90.53, ahead of 3mo average through October 2012 (87.83), but behind 3mo average through January 2012 (98.13). Similar dynamics can be traced across 6mo averages.
• Administrative & Support services index rose strongly from 100.7 in December 2012 to 104.2 in January 2013 (+3.48% m/m). The index is up incredible 19.63% y/y and I am at a loss as to how this can be explained given the current economic environment and fiscal consolidation. on 6mo average basis index is up from 91.88 average for 6mo through January 2012 to 102.63 average for 6mo through January 2013.

Charts to illustrate:

• Total services activity inched up to 107.9 in January 2013 from 107.7 in December 2012. Year on year, the index clocked a rise of 4.35%. 3mo average through January 2013 was at 107.57 - ahead of 3mo average a year before (105.73).

Despite these above improvements, overall services activity remains below the long-term recovery trend, albeit, owing to the strength of Wholesale Trade and ICT sectors (see the annual data analysis for these) and to the surprise uptick in Admin & Support services, the sector is tracing a shallow U-shaped recovery path so far. From January 2009, it took the index 16 months to hit the bottom, and we are 32 months into the recovery now, with still 1.55% to go (1.86% on 3mo average basis) before regaining January 2009 levels of activity. We will, barring unexpected events, close this gap in the next 2-3 months, but do keep in mind that January 2009 was already 1 year into contracting services activity in the first place.

11/3/2013: Irish Services Sectors Activity in 2012

Data for 2012 end of the year index of activity in Irish Services sectors is out and before I cover monthly data for January 2013, here are some annual results:

• Wholesale trade services activity expanded 4.03% in 2011-2012, after growing 14.2% in 2010-2011. In 2012 the sub-sector activity was up 31.6% on 2009 and up 18.8 on 2010 making this the fastest growing sub-sector in all Irish services since 2009.
• Wholesale and retail trade, repairs of motor vehicles and motorcycles sub-sector activity grew 2.24% in 2012 compared to 2011 after having expanded 7.2% in 2010-2011. Over 2009-2012 the sub-sector activity grew incredible 14.6% all of which was driven solely by growth in wholesale trade, offset by shrinkages in retail and other sub-sector activities.
• Transportation and storage sub-sector activity expanded 5.39% in 2011-2012 period, having grown at 3.8% in 2010-2011 period. Since 2009 through 2012 sub-sector activity shrunk by 1.88%.
• Accommodation and food services activities expanded at 2.27% in 2011-2012, following growth of 1.4% in 2010-2011 period. Between 2009 and the end of 2012, sub-sector activity was down 6.74%. Accommodation sub-sector alone grew 2.18% in 2011-2012 after posting growth of 5.4% in 2010-2011 and the index is on the aggregate still down 3.67% on 2009. Bizarrely, Food services activities grew since 2009 through 2012 at 1.76%, and this sub-sector posted expansion of 6.80% in 2011-2012 that followed growth of 2.9% in 2010-2011 period.
• Information and Communication sub-sector activity was the star of the show in 2011-2012, rising 8.40% on foot of 3.6% growth in 2010-2011. The sub-sector is now up 20.11% on 2009 making this the second fastest growing sub-sector in Irish services after Wholesale trade.
• Professional, scientific & technical activities sub-sector activity was the worst performing sub-sector in 2011-2012, shrinking 10.39%. This followed growth of 1.1% in 2010-2011. The sub-sector activity is now down 23.80% on 2009 making it overall the worst performing sub-sector, even worse than the Services (68, 92 to 96) sub-sector described below.
• Administrative and support services activity sub-sector clearly doesn't have much in common with the sub-sectors that usually require significant admin & support (e.g. professional, scientific and technical areas of activities) as it posted an robust growth rate of 7.54% in 2011-2012, albeit on foot of strong contraction of 7.2% in 2010-2011 period.The sub-sector activity is cumulatively up 2.67% on 2009. Either Irish exports are becoming more bureaucratised to warrant increases in Admin & supports, or there's some sort of substitution from shrinking public sector employment to temps and outsourced services. Otherwise, why on earth would an economy in a deep slowdown post growth in this category on 2009 figures?
• Services (68, 92 to 96) encompassing Real Estate activities, Gambling and betting activities and Other personal service activities were down 3.48% in 2011-2012, following virtually zero (+0.7%) expansion in 2010-2011. The grouping is down 19.67% on 2009 levels of activity.

Overall, for all services covered in the CSO data, sector growth clocked at 2.52% in 2011-2012 period, down from 3.3% growth in 2010-2011. Not a good sign, but better than posting negative growth, I guess. Compared to 2009, sector activity is up miserly 3.52%. And that is despite increases in R&D spending, massive hikes in availability of state-financed VC and angel investment (via Enterprise Ireland), big-time focus on incentives (including tax incentives) in 'key' sectors etc. Not exactly an achievement to brag about, but, again, could have been worse.

Here's another interesting chart:

As I mentioned above, Professional, scientific & technical activities sub-sector activity was down 23.80% on 2009 making it overall the worst performing sub-sector in all services sectors covered. Which isn't going well with the claims we keep hearing about our 'knowledge economy' and 'smart economy' and the rest of the hoopla surrounding branding like 'Innovation Island'. Looks like stripping ICT, there is not much of 'knowledge'-intensive trading going on out there. And we take out IFSC, the whole landscape of 'knowledge-based economy' might just as well start resembling a veritable desert? Instead, the 'traditional' (aka not 'smart' according to our Government policies priorities) wholesale trade is driving the sector activity, plus the 'smart' ICT sector.

And one last point. Here's the Services PMI data for Ireland for the period covered above in the index (see latest data here: http://trueeconomics.blogspot.ie/2013/03/533013-irish-services-pmis-february-2013.html) ...

Strange that a lift-off in PMI from ca 35 average in 2009 to 52 average in 2012 should be translating into only 3.5% increase in actual services activity, no? Sort of suggests something bizarre going on in PMI data, right? Hello, Markit!.. Station Earth paging...

10/2/2013: Irish Services Index: Still Searching for a Catalyst

Catching up with some data updates, the latest monthly data for Services sectors activity in Ireland was out recently (see link to CSO release here). The data overall points to weaknesses in Services in December 2012, as the summary table shows:

However, let's take a look at subtrends and subsectors:

• Wholesale Trade sub-index fell 4.01% m/m in December 2012 to 112.4 and was down 7.11% y/y. 3mo average through December 2012 is at 115.37 - well ahead of December 2012 monthly reading of 112.4, but down on 3mo average through September 2012 which stood at 116.23. 3mo average through December 2011 was 120.2 - significantly ahead of the average activity recorded in 3mo through December 2012. December 2012 reading was statistically within the historic average.
• Wholesale and Retail Trade, Repair of Vehicles etc sub-sector activity fell 2.65% m/m and was down 4.23% y/y in December 2012. 3mo average through December 2012 (108.57) was ahead of December monthly reading (106.4) and virtually unchanged on 3mo average reading through September 2012 (108.27). However the index reading and its 3mo average were both behind 3mo average through December 2011 (110.57). Similar deterioration in performance marked H2 2012 readings relative to H1 2012 and H2 2011.
• Transportation and Storage sub-sector activity remained relatively flat in December (110.1) compared to November (110.0) rising just 0.09% m/m, although the series are up 6.17% y/y. 3mo average through December 2012 (110.07) is below 3mo average through September 2012 (112.77), but well ahead of 3mo average through December 2011 (101.93). H2 2012 average stands ahead of H1 2012 average.

Per chart above, 

• Accommodation and Food Services sub-sector activity remained largely unchanged in December 2012 (105.5) compared to November 2012 (105.6) with 0.095% decline m/m contrasting 1.74% rise y/y. 3mo average through December 2012 (104.97) was only marginally ahead of 3mo average through September 2012 (104.83) and is ahead of 102.27 reading for 3mo average through December 2011. H1 2012 average was at 101.83 and this rose to 104.9 for H2 2012 average. December 2012 marks the fifth highest index reading since November 2009.
• Within the above sub-sector, Accommodation activity fell 0.18% m/m and rose 9.34% y/y - the largest rise in annual terms of all sub-sectors. Accommodation activity performance was particularly strong in H2 2012 (3mo average through December 2012 was 109.47 and 3mo average through September 2012 was 109.83) when activity index averaged at 109.65, compared to H1 2012 when it averaged 103.95.
• Administrative services fell 2.64% m/m but are still up 3.75% y/y, with 3mo average through December 2012 (102.17) virtually identical to 3mo average through September 2012 (102.20) and both ahead of 3mo average through December 2011 (92.0). H1 activity came in at slower pace than H2.

In heavily exporting sub-sectors of Services:

• ICT services activity rose 4.23% m/m in December 2012 (to 118.3) and was up 9.13% y/y. 3mo average through December 2012 stood at 114.83, ahead of 3mo average through September (110.17) and ahead of 3mo average through December 2011 (107.43). H2 2012 average activity stood at 112.5, up on 110.33 average for H1. The sub-index hit an all-time high in December 2012.
• In contrast with ICT Services, Professional, Scientific & Technical Activities have recorded an unpleasant contraction of 3.82% m/m in December 2012 to 88.2. The index is now 11.8% behind its average activity in 2010 and it has fallen a massive 16.40% y/y. 3mo average through December 2012 stood at 90.23, slightly up on abysmal 3mo average through September 2012 (86.8) but well below the 3 mo average through December 2011 (99.0). H2 average activity (88.52) was well below H1 2012 average activity (92.4) and well below H2 2011 activity (99.45).

Chart above provides outline for the overall Services Activity Index:

• The index has declined marginally (-0.66%) m/m to 106.0 in December 2012 and is now down 1.12% y/y. 3mo average through December 2012 was slightly healthier at 106.43 than the 3mo average reading through September 2012 (104.87), with 3mo average through December 2011 recording 105.0. However, overall H2 2012 average was practically unchanged at 105.65 against H1 2012 average of 105.43.
• The index is now reading below its momentum trend and is only marginally above (statistically) its historical average. As the chart above clearly shows, Irish Services Sector has been bouncing along a flat for some 13 months now, following a rise in twelve months before December 2011.
• Overall, thus, the data is not very encouraging. The sector seems to be searching for a catalyst to either the upside or the downside. Transport & Storage, ICT Services and Accommodation provide some hope (on the basis of y/y comparatives for 3mo average through December 2012, as well as December own y/y changes) for the future, whilst Wholesale services, as well as Professional, Scientific and Technical services creating a powerful downward drag.