18/2/20: Irish Statistics: Fake News and Housing Markets

My latest column for The Currency covers the less-public stats behind the Irish housing markets: https://www.thecurrency.news/articles/9754/fake-news-you-cant-fool-all-of-the-people-all-of-the-time-on-property-statistics.

Key takeaways:
"Irish voters cast a protest vote against the parties that led the government over the last eight years – a vote that just might be divorced from ideological preferences for overarching policy philosophy."

"The drivers of this protest vote have been predominantly based on voters’ understanding of the socio-economic reality that is totally at odds with the official statistics. In a way, Irish voters have chosen not to trust the so-called fake data coming out of the mainstream, pro-government analysis and media. The fact that this has happened during the time when the Irish economy is commonly presented as being in rude health, with low unemployment, rapid headline growth figures and healthy demographics is not the bug, but a central feature of Ireland’s political system."

Stay tuned for subsequent analysis of other economic statistics for Ireland in the next article.

8/8/19: Irish New Housing Markets Continue to Underperform

New stats for new dwelling completions in Ireland are out today and the reading press releases on the subject starts sounding like things are getting boomier. Year on year, single dwellings completions are up 15.5% in 2Q 2019, scheme units completions up 2.6%, apartments up 55.6% and all units numbers are up 11.8%. Happy times, as some would say. Alas, sayin ain't doin. And there is a lot of the latter left ahead.

Annualised (seasonally-adjusted) data suggests 2019 full year output will be around 18,000-18,050 units, which is below the unambitious (conservative) target of 25,000. And this adds to the already massive shortage of new completions over the last eleven years. Using data from CSO (2011-present), cumulated shortfall of new dwellings completions through December 2018 was 125,800-153,500 units (depending on target for annual completions set, with the first number representing 25K units per annum target, and the second number referencing target of 25K in 2011, rising to 30K in 2016 and staying at 30K through 2019). By the end of this year, based on annualised estimates, the shortfall will be 132,400-162,250 units. Taking occupancy at 2.1 persons per dwelling, this means some 278,000-341,000 people will be shortchanged out of purchasing or renting accommodation at the start of 2020.

Here is a chart summarising the stats:

Let's put the headline numbers into perspective: at the current 'improved' construction supply levels (using annualised 2019 figure), it will take us between 6.3 and 7.7 years to erase the already accumulated gap in demand. If output of new dwellings continues to grow at 11.8% per annum indefinitely, Irish construction sector will be able to close the cumulative gap between supply and demand by around 2029 in case of the targeted output at 25K units per annum, or worse, by 2031 for the output target of 30K units per annum.

15/5/15: Irish Construction PMI: April Stronger PMI, but Overall Activity is Weak

Irish Construction Sector PMI for April was released by Markit earlier this week. Here are the main points:

Overall Activity Index in Irish construction rose to 57.2 in April from 52.9 in March, bringing index back to the levels of January 2015. Current 3mo average is at 54.0 against 3mo average through January 2015 at 61.2, showing a clear slowdown in activity growth over most recent three months.

All three components of the index posted increases in April, with Civil engineering Activity index reaching above 50 marker (to read 51.0) for the first time since January 2015.

It is worth noting that Construction Sector PMIs have been pretty much out of touch with actual construction sector activity. Current readings on PMIs side signal blistering growth in activity and this is sustained, on average from the start of Q2 2013. Yet, Irish construction sector remains the second worst performing sector in the EU since the start of the crisis:

You can see the disconnection between PMIs (these are quarterly averages) and Construction sector actual performance setting in post Q2 2013 here:

10/4/15: Irish Construction Sector Performance: a European Perspective

Irish Construction Sector has been a positive contributor to GDP over the second half of 2014, prompting some - in fact many - media outlets to herald the return of the Men in Hard Hats. You can be excused for wondering, as to how many men (and women) in hard hats are out there working today, given there is little visible activity on the ground, but the numbers do not lie. Or so they say.

Here is the latest data from the Eurostat giving construction sector activity in terms comparable across the EU states.

Actual activity for all building and construction sectors in Ireland over Q4 2014 was running some 53.2% below the average activity levels recorded in 2000-2002. Over the course of 2014, average activity in the sector in Ireland was 53.2% below the same activity over 2000-2002. Both metrics ranked Ireland as the third worst-performing construction sector in the group of euro area 15 economies.

Having risen to 111.20 in Q4 2010, the index of overall construction activity in Ireland was at the highest level since Q4 2009, but below any quarter for the period of Q1 2000-Q4 2009.

Things are even worse in the case of building activity (ex-civil engineering), where Ireland ranks second worst, on par with Portugal in the EU28. Here, Q4 2014 reading is 63.5% below 2000-2002 average and full year 2014 average reading is 69% lower than 2000-2002 average. Once again, the index is currently reading at the highest level since Q4 2009, but as above, this reading is well below any quarterly reading between Q1 2000 and Q4 2009.

Here is a chart showing relative performance to EU and EA:

Two things to note in the above:

1. EU and EA uplift in Q4 2014 has been more pronounced than that for Ireland. 
2. The trends are now not exactly converging, with EU and EA both pushing up, while Ireland's upward momentum appearing to be weakening once again from H1 2014 on.

One aside question is: with the above evidence at hand, can anyone explain a huge rise in the reported 'investment' in commercial property in 2014? Other than buy-to-flip strategies of the vulture funds, where is all this 'investment' going?

21/12/2014: Planning Permissions Q3 2014: Being Un-dead ≠ Being Alive

This week, there were some champagne-popping media headlines about planning permissions print for Q3 2014 released by the CSO. So what's the hype was about, folks?

Starting from the top, total number of new planning permissions granted in Q3 2014 stood at 4,238. This represents a rise of 9.37% y/y and follows a decline of 4.25% y/y in Q2 2014. Sounds pretty solid, except when you look at the levels of activity involved. Which is so abysmally low, that a 9.37% rise is hardly an uptick worth boasting about.

Take a look at the chart:

Firstly, the uptick is still within the range of activity between H2 2011 and present. Secondly, current level of activity is still below any quarter on record between Q1 1975 and Q3 2011. In summary, then, current print is worse than any quarter of the dreaded 1980s recession. And activity is still down 75.6% on pre-crisis peak. It is 29.4% above the current crisis trough, but Q3 2014 number of planning permissions is still 2.37% below the lowest point between Q1 1975 and Q3 2011.

Total area covered by planning permissions in Q3 2014 was up 18.35% y/y having posted a decline of 6.16% in Q2 2014. This sound great. But, again, levels of activity are too low to interpret these increases as much more than 'bouncing at the bottom'. Outside the current crisis, you'd have to go back to Q1 1989 to find comparable level of activity as measured by the square meters permitted.

Worse, as the chart above shows, there is no life in the house-building sector. Area covered by new permissions when it comes to Dwellings is basically flat at the bottom of what already constitutes extremely poor activity. Q3 2014 still reads less than any other quarter from mid 1988 through Q4 2011.

In line with the above, number of new planning permissions for dwellings is itself trending in a narrow range at the bottom of historical records chart:

What is truly amazing is that seven (!) years after the start of the crisis and with property prices surging, there is absolutely no signs of life in the construction sector, when it comes to new planning permissions. None. Nada. And yet, Irish media is going off the rails spinning the small percentage increases as signs of upcoming 'boom'.

25/9/2014: Irish Planning Permissions Q2 2014: No Signs of Sustained Recovery, Yet...

CSO released planning permissions data for Q2 2014 (release here), so here are updated charts:

Starting from Total Number of Planning Permissions Granted: this rose in Q2 2014 to 4,149 which is up 8.24% q/q. In Q1 2014, total number of PPs granted was up massive 13.3% y/y down to anticipated changes in regulations. Year on year, Q2 2014 numbers were up 23.19% - which is significant. Alas, increases took place off a very shallow level of activity, with Q2 numbers down 76.1% on pre-crisis peak and down 4.42% on 1975-1999 minimum (lowest point in activity for that period). So current level of PPs is still lower than in any quarter between Q1 1975 and Q4 2010. On the somewhat positive side, current level is the highest since Q3 2011.

Still, as chart above shows, the post Q1 2012 trend remains flat (aka, there is no sustained recovery, yet).

Planning permissions granted for dwellings are showing even worse performance. These were up 18.64 q/q in Q1 2014 and are now down 1.8% in Q2 2014. However, y/y PPs for Dwellings are up 13.34%. The wild volatility ride continues in the series and the trend is still flat, showing no real recovery. Compared to pre-crisis peak, current activity is down 88.4% and relative to 1975-1999 minimum level of activity, Q2 2014 figures stand at the levels 40% lower than the worst point recorded in 1975-1999. This quarter marks the fifth worst quarter on record.

Chart above shows clearly that the trend has been flat since roughly Q1 2013.

Floor area underlying granted PPs is tanking, again, as illustrated in the chart below:

And with it, the average floor area per granted permission:

So here is the summary of H1 cumulative figures for 2014, compared to 2011-2012:

• Planning Permission granted for all types of construction rose to 7,982 in H1 2014 from 6,643 in H1 2013 and 7,040 in H1 2012. But total floor area underlying these permissions fell from 1,558, 000 sq.m. in H1 2011 and 1,764,000 sq.m. in H1 2013 to 1,456,000 sq.m. in H1 2014.
• Planning Permissions for Dwellings stood at 1,766 in H1 2014, up on 1,634 in H1 2013, but down on 1,899 in H1 2012. Total floor area associated with PPs for Dwellings stood at 563,000 sq.m. in H1 2012, rising to 727,000 sq.m. in H1 2013 and falling to 632,000 sq.m. in H1 2014.

In other words, I am failing to see any sustained upward momentum in future work pipelines for the construction sector. Backlog of past permissions might be working through the latest optimistic outlooks for the construction sector, but as far as genuine new activity goes, we are not there yet.

15/7/2014: Construction Sector PMI: Q2 2014

June PMI for Construction industry were out this week. Good discussion of some monthly data on this topic here.

Here are quarterly averages through Q2 2014:

• Total Activity index is up 3.6 points to 61.2 in Q2 2014 compared to Q1 2014. The index is up significantly - by +18.8 points - on Q2 2013.
• On average we have fourth consecutive quarter of growth in the sector activity and in three of these quarters, the index was statistically significantly above 50.0 expansion mark.
• Based on these figures we are in a confirmed recovery in the sector and in Q2 2014 this accelerated substantially. Which is good news.
• Housing Activity sub-index rose to 61.9 - marking rapid growth - and is now up 2.8 points on Q1 2014 and 17.1 points on Q2 2014. Again, we are into fourth consecutive quarter of above 50 readings and, as above, this is the third consecutive quarter of statistically significant readings above 50.0.
• Commercial Activity sub-index rose to 61.5, up 2.8 points on Q1 2014 and 20 points on Q2 2013. Same dynamics over the last four quarters as in the case of the Total Activity index and Housing Activity sub-index.
• Civil Engineering index is a drag on overall growth picture, averaging 44.9 over the Q2 2014, up 4.2 points on Q1 2014 and up 12.1 points on Q2 2013, but still below the 50.0 line. This is expected, as the Government continues to destroy public investment at an alarming rate.

Chart to illustrate:

24/4/2014: Where's that Fabled Property Boom in Ireland?..

Throughout 2013 and indeed starting from as far back as mid-2011, there has been a never-ending stream of 'good news' stories from the property markets. Many are real. Many are unverifiable. Some a complete nonsense.

Here is one forward-looking indicator for the health of the property market: planning permissions granted. And courtesy of CSO we can now update Q4 2013 data and thus compute full year 2013 results.

Here they are:

1. Planning permissions granted for All Types of Construction fell 3.5% y/y in 2013 to an absolute historical minimum of 13,901 (data from 1992). Between 2011 and 2013 total number of planning permissions is down 13.1%. Compared to peak, these are now down 77.7%. There is no turnaround in sight judging by these numbers. In fact, 2013 was 6th consecutive year of y/y declines.
2. Planning permissions granted for dwelling fell even more steeply: down 9% y/y in 2013 and down 23.6% since 2011. These too are now at historical low and in decline for seven years in a row. There is no turnaround here either.
3. Other new construction (ex-dwellings) planning permissions posted a rise of 0.7% y/y in 2013 and are up 14.9% on 2011 levels. However, at 3,431 total, these are 4th lowest in history and below the levels recorded in any year between 1992 and 2009. Relative to peak these are down 82%, so steep increase since 2011 was (a) exhausted in 2013 (given weak 0.7% rise) and (b) appears to be based on sheer magnitude of the permissions collapse at the height of the crisis. Still, we might call this some evidence of something that might signal a turnaround.
4. Planning permissions granted for extensions fell 3.6% y/y in 2013 and are down 12% on 2011 levels. These series hit absolute historical low in 2013 and mark 6 consecutive years of declines. 
5. Planning permissions granted for alteration, conversion and renovation purposes rose 0.8% y/y in 2013, with series down 6.6% on 2011 levels. 2013 was the second lowest year on record. Again, this evidence is not consistent with a turnaround.

Two charts to illustrate:

In terms of floor area approved:

1. 2013 saw increases of 4.4% y/y for all types of planning permissions granted. However, the increase was from the levels that were so low that even with 4.4% rise in 2013, 2013 levels are still 21.6% below those in 2011. 
2. 2013 was the second lowest year on record for planning permissions (by floor area) granted for All Types of Properties, for dwellings, for other properties ex-dwellings.
3. 2013 was the worst year on record for planning permissions granted on the basis of floor area for extensions.

Key takeaway: Planning permissions granted data shows no signs of a turnaround in building & construction sector in Ireland in 2013 and no signal of such turnaround in early 2014 either.

13/3/2014: Building & Construction: Weak Growth on Trend in Q4 2013

Yesterday, CSO published data on production volumes and values in Irish Building and Construction Industry covering the period through Q4 2013. Here are the details:

All Building & Construction:

• Value of production in All Building & Construction in Ireland rose 11.77% y/y following a 20.67% rise in Q3 2013. This marks 5th consecutive quarter of increases in Value.
• Value of production in All Building & Construction is now up 39.79% on Q2 2011, but is still down 71.74% on pre-crisis peak. It is 47.2% above the crisis period low.
• Value index is now back at the levels last seen in Q4 2009-Q1 2010, but still significantly lower than in any quarter between Q1 2000 and Q4 2009
• Volume of production in All Building & Construction in Ireland rose 10.97% y/y in Q4 2013 having posted a 20.0% rise in Q3 2013. This marks 5th consecutive quarter of no decreases in Volume, and a third consecutive quarter of increases.
• Volume of production in All Building & Construction is now up 36.68% on Q2 2011, but is still down 72.9% on pre-crisis peak. It is 45.1% above the crisis period low.
• Volume index is now back at the levels last seen in Q4 2009-Q2 2010, but still significantly lower than in any quarter between Q1 2000 and Q4 2009.

The trend up in the overall activity shown above is decomposed as follows for value and volume:

Key drivers for Value Index:

• Building ex-Civil Engineering activity rose in Value by 28.4% in Q4 2013 compared to Q4 2012, accelerating previous increases and posting the third consecutive quarter of positive growth. Nonetheless, increases are taking place from very low levels, with index still down 78.26% on peak.
• Residential building value activity posted a rise of 15.04% in Q4 2013 on Q4 2012, which is an increase on 8.8% rise posted in Q3 2013. Residential construction remains a major laggard, however. The index is up on 27.7% on its crisis period lows and is still down 91.5% on pre-crisis peak. Value in the sector is at around Q1 2011.
• Non-residential building rose 36.27% in value between Q4 2012 and Q4 2013 and the index is now 75.9% above its crisis period low. Compared to pre-crisis peak, the index is down 'only' 29%. Non-residential building is a major driver of the upward dynamics in the overall Value index.
• Civil engineering continued to shrink, with Value of activity in this sub-sector down 11% y/y in Q4 2013 and index down 35.8% on peak. However, previous gains in the index meant that Q4 2013 reading was 81.5% above crisis-period lows.

Key drivers for Volume Index:

• Building ex-Civil Engineering activity rose in volume by 27.5% in Q4 2013 compared to Q4 2012. Nonetheless, increases are taking place from very low levels, with index still down 79.1% on peak.
• Residential building value activity posted a rise of 14.1% in Q4 2013 on Q4 2012 and the index remains a major laggard: up only 25.8% on its crisis period lows and is still down 91.8% on pre-crisis peak.
• Non-residential building volume rose 35.4% between Q4 2012 and Q4 2013 and the index is now 75.2% above its crisis period low. Compared to pre-crisis peak, the index is down 'only' 30.7%. Non-residential building is a major driver of the upward dynamics in the overall volume index.
• Civil engineering continued to shrink, with volume of activity in this sub-sector down 11.6% y/y in Q4 2013 and index down 37.2% on peak. As with value, previous gains in the index meant that Q4 2013 reading was 64.7% above crisis-period lows.

So core conclusions:

• Increases in sector activity point to a very sluggish upward trend in Building and Construction by Value and Volume. This trend is confirmed in Q4 2013, but the sector continues to struggle to show appreciable level gains.
• Increases in Value and Volume are driven primarily by Non-Residential construction ex-civil engineering, with Residential building lagging in terms of growth rates, but still posting some gains.
• Civil engineering sub-sector is the weakest of all, posting y/y declines in Q4 2013.

10/2/2014: Ulster Bank Construction PMIs: January 2014

Ulster Bank Construction PMIs are out today with a massive hype over the numbers sweeping official analysts circles. Let's take the numbers in:

• Housing Activity index in January hit 59.8, which is statistically above 50.0 and marks 7th consecutive month of nominal readings above 50.0, although two of these months were not statistically significantly different from 50.0. Nonetheless, good news. 3mo MA through January 2014 is now at 61.1 (very healthy) against previous 3mo MA of 58.3. And 6mo MA is at 59.7 above 43.4 6mo MA through January 2013. Again, good numbers. However, the activity growth rates have slipped m/m, down from 63.2 in December 2013 - a significant fall of 3.4 points. Another key caveat here is that activity is rebounding from extremely low levels, so we can expect a big bounce. The encouraging news is that the bounce is sustained over 7 months and as the first chart below shows - it is robust and well above the upward-sloping long run trend.
• Commercial sector activity is also above 50.0 in January at 59.3. Overall dynamics are very similar to those in the Housing sub-sector. The index is now above 50.0 nominally for 6 consecutive months, with five of these being statistically significantly ahead of 50.0. 3mo MA is 60.5 (high) and compares favourably to 3mo MA through November 2013 which stands at 56.2. But, again, monthly change in the index shows slower growth in January (59.3) than in December 2013 (62.3). And low levels of activity for the starting point are also suggesting this to be a sustained rebound, consistent dynamically with normal recovery. Good news is that the series are still well above the long run upward trend line.

• Civil Engineering sub-index disappointed once again. In January 2014 index fell to 37.3 - the first time we have the reading below 40 since July 2013. This is plain ugly, as the index fell from 43.2 in December. We have not seen any growth in the Civil Engineering sub sector in any month since January 2009. Poor dynamics are confirmed by 3mo MA, 6mo MA and 12 mo MA - in other words, any way you take this data - it is bad.

• Overall construction sector activity index slipped to 56.4 in January 2014 from 58.3 in December 2013. There is much hoopla in official comments about December reading being 'huge', and it was strong, but it was way weaker than the top readings over the last 6 months across all subcomponents (61.7 in Housing activity recorded in October 2013) and it was only the 3rd highest reading for the overall index in the last 6 months. In other words, it was strong, but it was not spectacular. Worse, at 56.4 we are now below 3mo MA and bang on with the 6mo MA. Good news - we are still above the upward-sloping long run trend line. This is the fifth month of readings over 50.0 and all five were statistically significant.

So top of the line summary for indices: we have good readings in overall index and two sub-components, and a very poor reading in one subcomponent. No need for any spin here - net sector activity is positive and it has been sustained over few months now. Let's hope this continues so we can set aside any fears of the latest improvements being a 'dead cat bounce'.

9/12/2013: Irish Construction Sector PMI, November

Irish Construction sector PMI (Ulster Bank & Markit) is out today for November. The numbers are good.

Overall Index is down to 58.8 in November from 59.4 in October, but the reading remains firmly above 50.0 and this markets the third consecutive month of above 50.0 readings. All readings since September are statistically significantly above 50.0.

Dynamics are good, indicating solid upward trend:

• 12mo MA through November 2013 is at 48.0 against 44.4 for the same period in 2012
• 6mo MA improved to 52.4 in November 2013 against 42.1 a year ago
• 3mo MA is up at 58.0 in November 2013 against 46.9 in 3mo through August 2013.

Total Activity Index is strongly driven by upward trends in Housing Construction:

• Housing Activity index is at 60.4 in November, which is down on massive 61.7 in October.
• 12mo MA is at 50.4 against 43.0 for the same period in 2012
• 6mo MA is at 55.4 against 41.7 12 months ago
• 3mo MA is at 60.5 against 50.3 for 3mo through August.

Another major driver for the upward momentum in overall Construction PMI was Commercial Activity - running in line with Housing (chart above):

• Commercial activity index moderated to 60.0 from 61.6 in October. Commercial and Housing Activity sub-indices have been running jointly above 50.0 for 4 months in a row; in statistically significant terms this dynamic is present for three months in a row.
• 12mo MA for Commercial Activity index remains below 50 at 47.9, but this marks a major improvement on 42.9 for 12mo average through November 2012.
• 6mo and 3mo MAs are outperforming y/y and period-on-period. 

Only disappointment is Civil Engineering sub-index which recorded accelerated rate of decline in November at 45.7, compared to October when the reading was 47.2. November marks second consecutive month of accelerating falls.

However, November rate of decline is much shallower than was recorded a year ago (31.1).

In general, strong news on PMI front. and This supports overall Manufacturing and Services trends (see here: http://trueeconomics.blogspot.ie/2013/12/5122013-services-and-manufacturing-pmis.html)

11/11/2013: Irish Construction PMI - September 2013

While on PMIs, let's update Construction PMIs too, to cover September 2013 data. Manufacturing and Services October PMIs are covered here: http://trueeconomics.blogspot.ie/2013/11/11112013-services-and-manufacturing.html

In September, Overall Construction Sector PMI for Ireland rose to 55.7 which is the first reading above 50.0 (and it is statistically significantly different from 50.0) since January 2009.

The rise was broadly anchored, with Housing sub-index up at 59.5, marking the third consecutive month of above 50.0 readings (although previous two months were not statistically distinct from 50.0). Commercial activity sub-index also posted a rise to 56.1, marking the second consecutive month of above 50.0 readings. However, Civil Engineering sub-index remained below 50 at 47.3, although the pace of declines in activity has eased somewhat from 41.0 in August.

25/9/2013: Planning Permissions, Ireland, Q2 2013 and H1 2013

Q2 data for Planning Permissions Granted in Ireland is out today and on the surface it offers some good news reading.

Per CSO: In the second quarter of 2013, planning permissions were granted for 1,926 dwelling units, compared with 1,406 units for the same period in 2012, an increase of 37.0%.

In addition:

• Planning Permissions were granted for 1,496 houses in the Q2 2013 an increase of 28.3% y/y.
• Planning permissions were granted for 430 apartment units, an increase of 79.2% y/y. 
• The total number of planning permissions granted for all developments was 3,368. This compares with 3,672 in the second quarter of 2012, a decrease of 8.3% y/y. 
• Total floor area planned was 834 thousand square metres in the second quarter of 2013. Of this, 39.9% was for new dwellings, 39.7% for other new constructions and 20.4% for extensions. The total floor area planned increased by 1.2% in comparison with the same quarter in 2012. 

Some encouraging signs up there… although if you think the crisis is over, here's a handy chart from CSO:

The above, as CSO notes, puts things into perspective: we are starting from exceptionally low levels, so even a small uptick translates into large percentage changes. Still, I am happy to spot an improvement.

Now, let's take a closer look. I am dealing from here on with permissions issued, not units covered by these permissions.

• Total number of planning permissions was down at 3,368 in Q2 2013, a decline of 8.28% y/y. In Q1 2013 there was a decline of 2.76% y/y, so rate of decline increased from the beginning of the year.
• Total number of planning permissions in H1 2013 stood at 6,643 - down 5.64% y/y.
• Total number of new permissions for dwellings granted in Q2 2013 was 772, which is down 18.05% y/y, which compares to 9.93% drop recorded in Q1 2013.
• Total number of planning permissions for dwellings in H1 2013 stood at 1,634 - down massive 13.95% y/y.
• Total number of new permissions for other new construction (ex-dwellings) granted in Q2 2013 was 754, which is down 8.94% y/y, which compares to a rise of 12.95% recorded in Q1 2013.
• Total number of planning permissions for other new construction (ex-dwellings) in H1 2013 stood at 1,539 - up barely noticeable 1.05% y/y. At least these series were up.
• Total number of permissions for extensions granted in Q2 2013 was 1,489, which is down 3.87% y/y, which compares to a decline of 3.21% recorded in Q1 2013.
• Total number of planning permissions for extensions in H1 2013 stood at 2,785 - down 3.57% y/y.
• Total number of permissions for alterations, conversions and renovations granted in Q2 2013 was 353, which is unchanged y/y, and compares to a decline of 11.94% recorded in Q1 2013.
• Total number of planning permissions for ACRs in H1 2013 stood at 685 - down 6.16% y/y.

So in terms of actual permissions issued: we have a bit of a soggy outcome: nothing is up, everything is down y/y… Declines have accelerated in Q2 compared to Q1 in four out of five categories; and H1 figures are very poor for all, but one category. In terms of units approved: we have a decent uptick. I would suggest we use caution and see if the activity picks up from here on.

Three charts to illustrate:

18/9/2013: Building & Construction Sector: Some Cautiously Positive Signs in Q2 2013

CSO released today Q2 data for production indices in Building & Construction. Here are some headline numbers:

Value of Production Indices:

• All building & construction production rose 4.23% q/q and is up 11.98% y/y. The Index is up 7.11% on Q2 2011, but is still down 76.64% on peak. Note: Q2 2012 was the absolute low. The index is now on the rise since Q3 2012 so we have nine months of increases. The rate of increase is significant, but the rise is from a very low level of activity to start with.
• Building ex civil engineering is up 8.2% q/q and 11.24% y/y. The series are down 3.88% on Q2 2011 and down 82.54% on peak. Note: Q2 2012 was the absolute low. The index is now on the rise only since Q1 2013 so we have to be cautious with interpreting any increases to-date.
• Residential building activity rose 2.25% q/q and is up 8.33% y/y. The activity level is now exactly at the level it last recorded in Q1 2012. The index is still down 92.0% on peak and is now up 8.3% on absolute low. This marks the second consecutive quarter of increases, which suggests that we are getting closer to calling a turnaround. The index is still down 10.78% on Q2 2011.
• Non-residential building activity is up 10.95% q/q and 13.22% y/y, but only 0.16% on Q2 2011. Relative to peak, activity is down 50.77%, but it is up 13.22% on absolute low. The series are volatile and we have only one quarter of increase consecutively, which means we should read this change with caution.
• Civil engineering activity is slightly down -0.13% q/q, but still up 12.59% y/y. Activity is now 31.79% ahead of Q2 2011 and the series are down 44.63% on peak and up 59.23% on absolute low. Timing of these series changes is more consistent with public spending and thus quarterly changes are not exactly very useful. 

Volume of Production Indices:

• All building & construction production rose 1.7% q/q and is up 11.16% y/y. The Index is up 4.37% on Q2 2011, but is still down 77.17% on peak. The index is now on the rise since Q3 2012 or nine months of consecutive increases. This suggests that price effects had a positive boost to value numbers shown above, but overall trend up is sustained on both volume and value sides.
• Building ex civil engineering is up 8.0% q/q and 10.76% y/y. The series are down 5.91% on Q2 2011 and down 83.54% on peak. The index is for just one quarter, so the same caution expressed about the value index applies to volume.
• Residential building activity rose 1.25% q/q and is up 8.0% y/y. The index is still down 92.2% on peak and is now up 10.96% on absolute low. This marks the second consecutive quarter of increases.
• Non-residential building activity is consistent with the value index performance, same as for civil engineering activity is slightly down -0.13% q/q, but still up 12.59% y/y. Activity is now 31.79% ahead of Q2 2011.

Overall: some positive news on total index and very cautiously positive news on ex-civil engineering data. Residential activity showing positive upside, but non-residential series are still bouncing along the bottom. Non-residential activity is showing some cautiously positive developments.

Charts to illustrate:

13/6/2013: Irish Construction Sector Activity Post Some Better News: Q1 2013

Some good news for Irish construction sector (not as impressive as German stuff, but... much more welcome, given the sector dynamics so far through the crisis).

Per CSO: "The volume of output in building and construction was 4.4% higher in the first quarter of 2013 when compared with the preceding period.

• This reflects increases of 6.8% and 1.2% respectively in residential building and non-residential building. 
• There was a decrease of 0.7% in the volume of civil engineering.  The change in the value of production for all building and construction was +1.9%. 
• On an annual basis, the volume of output in building and construction increased by 10.7% in the first quarter of 2013.  
• There was an increase of 9.5% in the value of production in the same period. 
• The annual rise in the volume of output reflects year-on-year increases of 26.8% and 2.4% respectively in civil engineering and non-residential building work. 
• Output in residential building decreased by 2.5%"

Now, graphs and a summary table for more detailed analysis:

14/1/2013: Irish Construction PMI - December 2012

The latest stats for Construction Sector PMI for Ireland are out (link here) and the data is not encouraging. At 43.0, the rate of decline in the sector activity was slightly down in December 2012, compared to November and October 42.6 readings. In fact, the rate of decline was the lowest since May 2012 when the index reading was 46.3. However, despite this, Construction sector activity continued to show uninterrupted contraction for 41 months in a row (the records available to me only go back to August 2009).

Overall sector PMI is currently below12mo MA of 43.84 (2011 average was 44.42, ahead of the 2012 average). PMI in December was ahead of 3mo MA of 42.73, but not statistically significantly so, and ahead of 6mo MA of 42.17.

As shown above, rate of decline has moderated in all 3 core components of the overall index:

• In Housing sub-sector, index finished 2012 on 45.8, an improvement m/m from 44.2 in November and better than 3mo MA (44.47), 6mo MA (42.82) and 12mo MA (42.49).
• In Commercial sub-sector, index ended December at 41.3 - a gain on 39.8 in November, but below 3mo MA (41.73), below 6mo MA (42.65) and below 12mo MA (45.16)
• In Civil Engineering, index rose to 35.2 (still massively below 50 line that would mark zero growth) from 31.1 in November. The index is ahead of 3mo MA (32.33), ahead of 6mo MA (33.42) and below 12mo MA (36.86).

Correlations between different index components are shown below:

Overall, Construction Sector activity is still contracting, albeit contraction rate has moderated somewhat. In December 2011, the index stood at 49.9 (virtually zero growth signal), while in December 2012 it was at 43.0 (clear contraction). Housing subsector registered the only monthly expansion at 52.3 (since 2009) in December 2011, contrasted by an outright decline of 45.8 in December 2012. Commercial subsector activity showed nearly zero growth at 49.8 in December 2011 against an outright and deep contraction of 41.3 in December 2012. And Civil Engineering posted a substantial contraction reading of 37.7 in December 2011, more than matched by an even deeper contraction of 35.2 in December 2012.

11/12/2012: Ireland and EU27 Construction sector activity Q3 2012

On foot of the previous post looking at Q3 2012 data for Construction and Building Sector activity in Ireland, here are some international comparatives.

Keep in mind the mental key to decoding these: per Irish Government and a host of its 'analysts', Ireland has delivered an economic turnaround sometime back in early 2012 and our economy has stabilized. We are not Greece. In fact, per claims, we are the best performing economy in the Euro area periphery.

With the above in mind, chart below shows Ireland's Building & Construction Sector performance with index normalized at 100=2005, set against the backdrop of the 'Peripheral' Euro area states:

Pretty clearly, we are 'unique' in the periphery as being so far the worst performing economy in terms of Building & Construction. Now, let's recall that in Ireland, Building & Construction are about the only conduits for household investment. Also, let's recall that household investment is usually seen as the leading indicator of cyclical turnarounds.

Now, to the full EU27 comparative:

And again, by far, Ireland is the worst performer in the above. In fact, based on 2012 data through Q3:

• Ireland's index of construction activity is currently at 20.85, down on 2011 index of 23.4 and down on pre-crisis peak of 103.6. 
• Which means that Irish activity index is now down to the absolute lowest in the EU27. Worse, our index reading is worse than Greece's (37.7 or 81% ahead of Ireland's). 
• We are 44.7% below Greece, 53.2% below Spain, 62.7% below Portugal and 73.2% below Italy.

So that 'turnaround' or in Hillary Clinton's words 'rebound', then... certainly not to be seen in Building & Construction sector.