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.

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:

25/6/2013: Planning Permissions in Ireland: Q1 2013

The latest data on Planning Permissions was released by the CSO under a rather cheerful headline: "Dwelling units approved up 24.7% in Q1 2013" which prompted me to start writing a positive note. However, having updated the database, I could not believe my eyes. Not until the third bullet point in the release do you get the sense as to what is really going on in the sector - the fact confirmed by looking at CSO data, rather than reading the CSO release which focuses the top points of analysis on positive side of select sub-components of the overall sector performance. So here are the facts, as conveyed to us by the data itself.

In Q1 2013, total number of planning permissions granted in Ireland for all types of construction stood at 3,275, which is 1.35% down on Q4 2012. This marks de-acceleration of seasonally-driven 17.96% q/q decline recorded in Q4 2012. However, on an annual basis, allowing for some seasonality controls, overall number of planning permissions granted in Q1 2013 was down 2.76%, which contrasts against an annual increase recorded in Q4 2012 of 1.13%.

In summary, things are not going well at all. Q1 2013 marks an absolute historic low for any quarter since Q1 1975! That's right: we hit an absolute historic low in 37 years and CSO release says things are 'up' by focusing on sub-series before it reports in the text the actual aggregates.

In charts below, I marked current sub-period (since Q1 2010) low against historic low before the current crisis. Take a look.

Note: in Q1 2013,

• Total number of planning permissions hit a historic low (as mentioned above)
• Total number of permissions for dwellings stood at 862, the second lowest after the historic low of 832 hit in Q4 2012.
• Total number of permissions for 'other new construction ex-dwellings' stood at 785, which is above the historic low of 636, but still marks a decline q/q.
• Number of permissions for extensions hit a historic low.
• Number of Alterations, conversions, renovations etc hit a historic low. 

Again, I find little to cheer in the above...

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:

4/4/2013: Irish Planning Permissions 2012 data

Per data released on March 22 by CSO, Irish Planning Permissions for Construction have continued to collapse in 2012. Full year data shows that:

• In 2012 total number of all types of planning permissions issued in the state stood at 14,407 - an all-time record low (with records starting in 1992), down 9.91% on 2011. 2010-2011 rate of contraction was 15.11% and 2009-2010 rate of decline was 27.64%, so naturally for such steep drops in previous years, the rate of annual declines is moderating. 
• From the pre-crisis peak, number of planning permissions is now down 76.90%
• Planning permissions for dwellings fell to 3,643 in 2012, down 23.58%, having fallen 24.89% in 2010-2011 and 38.85% in 2009-2010. Compared to peak, the permissions are down 86.76% to a new historical low.
• Planning permissions for other new construction rose in 2012 to 3,407 from 2,964 in 2011, a rate of increase of 14.95% y/y that follows declines of 7.52% in 2010-2011 and 29.01% in 2009-2010. Relative to peak, 2012 level of permissions for other new construction are down 82.4% against absolute minimum reached in 2011 when these were down 84.72% relative to peak.

In square footage terms, planning permissions issued

• Fell 21.56% y/y for all types of new construction (these are now down 86.67% on peak, hitting a new historical low);
• Fell 39.48% y/y for dwellings (these are now down 90.89% on peak, hitting a new historical low);
• Fell 7.44% y/y for other types of new construction (these are now down 86.78% on peak, hitting new historical low);
• Rose 0.52% for extensions (these are now down 68.87% on peak, having hit the bottom at -73.41% on the peak in 2011).

At certain point in time (soon, one assumes given the rates of decline on peak already delivered), a broom shed construction somewhere in West Meath will qualify as an uplift in the market....

14/03/2013: Irish Construction & Building Sector Activity 2012

Latest index for Irish Building and Construction Production volumes and value is out today, confirming what I wrote about on the foot of new planning permissions data (here), namely that Construction and Building sector continued to shrink in 2012 and there is little hope beyond some public spending projects uptick for the already devastated sector.

Top headline numbers for full year 2012 (these are imputed from Q1-Q4 2012 data):

• Value index for all production activity in Building and Construction sector declined from 25.9 in 2011 to 24.7 in 2012 (using base of 2005=100). This means all activity in value terms has hit another historical low for the series and is running at less than 1/2 of the level of activity in 2000 when the index was reading 53.5.
• 2012 was the sixth consecutive year of declines in the sector activity by value and volume. 
• Peak sector activity was registered in 2006 with index reading of 109.7, which implies a decline from peak through 2012 of 77.5% in value terms.
• Value sub-index for Building excluding Civil Engineering has dropped from 20.9 to 18.2 between 2011 and 2012 (decline of 12.8% y/y) and is down 83.2% on peak attained in 2006.
• Residential Building value sub-index is down to 8.6 in 2012 from 10.2 in 2011, marking a decline of 92% on peak (2006).
• Non-residential building sub-index for value is down to 55.2 from 61.7 in 2011 and is 53.9% below peak levels attained in 2008.
• Civil engineering value sub-index was up in 2012 to 66.0 from 58.6 in 2011 (+12.6% y/y) but is down 49.3% on peak attained back in 2007. 

Similar story is traceable across the volume of production indices.

Charts to illustrate (note, charts are referencing a different base - instead of 2005=100 these have been rebased to 2000=100 for more clear compounded effect illustration):

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.

11/12/2012: Construction Sector Activity in Ireland - Q3 2012

Horrible numbers out today for the Irish Building & Construction sector.

Per CSO: "The volume of output in building and construction was 4.2% lower in the third quarter of 2012 when compared with the preceding period. This reflects decreases of 5.3%, 2.4% and 1.9% respectively in the volume of residential building, civil engineering and non-residential building. The change in the value of production for all building and construction was -2.1%. On an annual basis, the volume of output in building and construction decreased by 10.8% in the third quarter of 2011. The value of production decreased by 8.5% in the same period."

Now some details:

• Value Index for ex-Civil Engineering work stood at 17.5 in Q3 2012 (100=2005 activity levels), down 15.5% y/y, marking 23rd consecutive quarter of declines (! give that number a thought).
• Worse, ex-Civil Engineering Value index is down 2.23% q/q, down 10.15% for Q2-Q3 2012 compared to Q4 2011-Q1 2012 6mo periods and down 14.5% for the 6 months through Q3 2012 compared to same period in 2011.
• The rate of annual decline in the index has accelerated since Q4 2011.
• Volume Index for ex-Civil engineering work fell to 15.5 in Q3 2012 from 15.9 in Q2 2012. The Index is now also down consecutive 23 quarters. The annual rate of decline continued to accelerate for the fourth quarter in a row.
• In 6 months through Q3 2012 index fell 15.82% compared to same period of 2011. Quarterly index change is -2.52%.
• Relative to peak, Value Index in ex-Civil Engineering sector is now at 15.39% and Volume Index is at 14.57%.

In Civil engineering sector things are bouncing at the bottom - a pattern that is now running solidly from Q3 2010:

• Value Index for Civil engineering slipped to 63.0 from 64.6 in Q3 2012 compared to Q2 2012, marking a decline of 2.48% q/q. However, due to massive jump in Q2 (+16.2% y/y), index is still 9.2% ahead of Q3 2011 reading. This side of the Index is likely to suffer in 2013 due to Budget measures on capital spending.
• Volume Index of Civil Engineering also fell from 57.5 in Q2 2012 to 56.1 in Q3 2012 (-2.43% q/q), although the index is up 7.9% y/y in Q3 2012 (due to a one-off substantial rise of 14.8% in Q2 2012).

Overall, based on simple averages, activity in Civil engineering remained broadly unchanged - at absolute lows - since Q3 2010, averaging between 63.3 for the Value Index and 56.3 for the Volume Index. This dynamic is simply inconsistent with any talk about economic turnaround.

Misery comparatives for the sector are self-evident when looking at residential and non-residential indices:

• Value of Residential Construction reached another historical low in Q3 2012 - hitting 8.2, down from 8.5 in Q2 2012. This means that activity by value in this sub-sector is now down 91.8% on 2005 levels or 92.8% on pre-crisis peak. The Index has been posting annual rates of decline in every quarter since Q1 2007, or 23 quarters in a row. The rate of decline (y/y) also accelerated since Q1 2012.
• Volume of Residential Construction is down from 7.6 in Q2 2012 to 7.2 in Q3 2012. Again, this implies that volume index is now down 92.8% on 2005 level and 93.0% down on pre-crisis peak. Annual rate of decline accelerate to 20% in Q3 2012, the highest rate in 4 quarters. The index has now posted 26 consecutive quarters of annual declines.
• Non-residential Construction Value Index fell from 53.5 in Q2 2012 to 52.5 in Q3 2102, with annual rate of decline accelerating to 15.5% in Q3 2012, marking third consecutive quarter of annual declines. The index is now 57.4% down on pre-crisis peak.
• Non-residential Construction Volume Index is down from 47.5 in Q2 2012 to 46.6 in Q3 2012, marking an accelerated annual rate of decrease of 16.3% in Q3. The Index is now down 58.4% on pre-crisis peak.

If anything the above dynamics clearly show that the rates of activity collapse are accelerating through Q3 2012, nto ameliorating or turning to positive growth. Both series dynamics, therefore, are consistent with worsening of economic conditions, not stabilization or a turnaround.

I will blog on European countries comparatives in the next post.

24/9/2012: Irish Building & Construction decline v EU27

Last post on Irish Building & Construction sector data for Q2 2012. Here are the comparatives for EU member states based on current activity (through Q1-Q2 2012) compared to 2006-2007 peak levels:

No need to comment on the above...

24/9/2012: Irish Building & Construction Sector Activity Q2 2012

And in another post prompted by @stephenkinsella tweet, here's an update on CSO data for Irish Building & Construction sector activity:

Ex-Civil Engineering:

• Value index fell to 17.6 in Q2 2012 from 18.7 in Q1 2012, marking 5.88% decline q/q and down 15% y/y.
• H1 2012 Value index is down 12.11% on H2 2011 and down 13.78% on H1 2011.
• Value index fell to 15.5% relative to the peak and volume index declined to 14.66% of the peak level
• Volume index dropped to 15.6 in Q2 2012 down on 16.7 in Q1 2012, marking a 6.59% decline q/q and 16.6% decline y/y. 
• H1 2012 volume index was down 13.17% on H2 2011 and down 14.55% on H1 2011.
• Both Value and Volume indices are now down on an annual basis for 22 consecutive quarters.

Civil Engineering:

• Value of Civil Engineering activity rose from 58.4 in Q1 2012 to 62.7 in Q2 2012 (+7.36% q/q) and advanced 11/4% y/y, registering the first annual rate of increase after 15 quarters of contraction.
• H1 2012 value index rose +1.68% on H2 2011 and is up 5.21% on H1 2011.
• Volume of activity also grew from 52.3 in Q1 2012 to 55.8 in Q2 2012 (+6.69% q/q and +9.8% y/y) also breaking for the first time annualized contraction period of 18 quarters.
• H1 2012 volume index rose 0.93% on H2 2011 and is up 4.75% on H1 2011.

Residential and non-residential:

• Residential construction value index fell from 9.1 in Q1 2012 to 8.6 in Q2 2012 (-15.7% y/y and -5.49% q/q). H1 2012 index was down 9.69% on H2 2011 and down 16.51% on H1 2011. Relative to peak, the index is now down 92.45%.
• Residential construction volume index fell to 7.7 in Q2 2012 from 8.3 in Q1 2012 (decline of 7.23% q/q and down 17.2% y/y). The index is now down 92.53% on peak.
• Non-residential construction value index fell from 55.4 in Q1 2012 to 51.5 in Q2 2012 (-14.7% y/y and -7.04% q/q). H1 2012 index was down 14.41% on H2 2011 and down 12.23% on H1 2011. Relative to peak, the index is now down 58.23%.
• Non-residential construction volume index fell from 49.4 in Q1 2012 to 46.0 in Q2 2012 (-15.8% y/y and -6.88% q/q). H1 2012 index was down 15.12% on H2 2011 and down 12.48% on H1 2011. Relative to peak, the index is now down 58.89%.

To sum up: rates of decline are (annually) in double digits and/or accelerating in Q2 2012 in Residential (value and volume), Non-residential (value and volume) and ex-Civil Engineering (value and volume). Residential construction is now at 8.6% of 2005 levels in value terms and 7.7% of 2005 levels in volume terms. Non-residential construction is now at 51.5% of 2005 levels in value terms and 46% in volume terms. Civil Engineering activity is now at 62.7% of 2005 levels in value terms and at 55.8% in volume terms. All activity ex-civil engineering is now down to 17.6% of 2005 levels in value terms and 15.6% in volume terms.

15/6/2012: Q1 2012 Construction Sector Activity for Ireland

Having dealt with leading indicator for Construction sector activity - Ulster Bank PMIs - in the previous post, now's the time to update the latest actual outrun figures from the CSO that cover Q1 2012. Keep in mind - core conclusion in the previous analysis showed no signs of uptick in activity in the sector, with housing and commercial real estate construction activity continuing to shrink.

Pre latest CSO data:

• In Q1 2012 Value of all activity ex-Civil Engineering has fallen to 18.7 against 20.6 in Q4 2011. Quarterly rate of decline therefore is -9.22% for value against the annual rate of decline of -13.4%. Y/y rate of decline accelerate from Q4 2011 when it was 8.4%. Over last 6 months the index declined -5.07% compared to previous 6 months and -10.88% y/y. Q1 2012 marks an absolute record low activity by value in the broader construction sector ex-civil engineering.
• In Q1 2012 Volume of all activity ex-Civil Engineering fell to 16.7 from 18.5 in Q4 2011, marking another record low for the series. Year on year, the index has fallen 13%, which represents the sharpest contraction in four consecutive quarters. Quarter on quarter the index is down 9.73%. Things are getting much worse, rather than less worse. Over the last six months, average index reading fell 5.38% compared to previous six months average and year on year last six months average is down 9.51%.
• Relative to peak, value of construction production ex-civil engineering now stands at just 16.45% of the peak levels and volume of activity is now at 15.70% of the peak levels, both showing record declines.

For Civil Engineering sub-sector - the very same trends are true, with one exception - the rate of declines in activity slowed, not accelerated, in Q1 2012. Alas, we are thus in the case of getting worse more slowly, which is, as I like pointing out, not the same as getting better.

Value of Residential Construction fell to 9.4 in Q1 2012 against 9.7 in Q4 2011. The index declined 1.4% y/y and is now down, on average 4.5% in the last six months compared to previous six months. Year on year, average activity in the last six months fell 18.03%. Now, keep in mind, Residential Construction is now running at 91.75% below its peak pre-crisis levels.

Volume of Residential Construction fell to 8.5 from 8.8 in Q4 2011, a decline of 15% y/y. Average activity for the last six months was down 4.95% on previous six months and down 15.61% on same period a year ago. Relative to peak, volume of residential construction is now down 91.76%.

Per chart above, Value of Non-Residential construction declined to 53.8 in Q1 2012 from 62.4 9n Q4 2011, marking annual decline rate of 12.4%. Average six months activity is now down 5.53% on previous sexi months period and is down 5.83% on the same period a year ago. Relative to peak, non-residential construction value is down 56.37%.

Volume of Non-Residential construction activity dropped to 47.8 from 56.6 in Q4 2011. Annual rate of decline in Q1 2012 of -12% comes on foot of an annual increase of 3.3% in Q4 2011. 6mos average through Q1 2012 is now 5.43% below the previous 6mo period and is 4.31% below same period a year ago.

Chart below illustrates annual changes.

So the very same trends shown by the PMIs are present in the actual data. Once again, where's all that pinned up demand for new offices and facilities, for retrofits of facilities and for fit-outs that were supposed to come with the 'robust jobs creation' by the MNCs?

15/6/2012: Irish Construction PMIs - no sign of that MNCs jobs creation, again

What is going on in Irish construction sector, folks? The latest statements from the Irish development authorities and the Government and its 'experts' would make you believe that MNCs are killing each other trying to rush into building new space to house those thousands of workers that are allegedly being hired by them. Of course, we know the latter is balderdash (see here) when it comes to date through 2011, but can it be true for trends since 2011? After all, the Government aims to create tens of thousands new jobs in 2012 in the MNCs-sectors.

Ok, here are two posts on latest construction sector activity. First one on Construction Sector PMIs (courtesy of the Ulster Bank) and the second one on CSO data.


Take a look at the latest (May 2012) Construction Sector PMIs:

Suppose there was a rush in activity in MNCs-sectors. That would translate in some uptick in construction activity in Commercial sector. Right? In May 2012 Commercial sector Construction PMI stood at 46.8, which is (1) signal of rather significant rate of contraction m/m, (2) marks the lowest reading in the sub-index since November 2011, and (3) is worse than shallower rate of contraction signaled by 48.4 reading in April.

In fact, May 2012 reading is below 3mo and 6mo MA readings. So the rate of decline has accelerated in May compared to 3mo average and 6 mo average.

As dodgy as the activity is across all Construction-related sub-categories, it is the Commercial sub-sector activity that is signaling worsening of the already poor trend.

So, where are those thousands of new jobs going to be housed? Per Ulster Bank (emphasis mine): "Those panellists that recorded a decline in overall construction activity during the month mainly linked this to falling new business. New orders at Irish constructors decreased for the fifth successive month. Where firms were able to secure new business, they reported that this was often dependent on prices being reduced."

Now, you might say that there can be 'expectations' of future activity that are not fully reflected in the above figures. Yep. "Irish construction firms remained optimistic that activity will be higher in 12 months’ time than current levels, with sentiment improving from that registered in April. That said, positive expectations largely reflected the fact that a rise in activity is likely given the low levels currently being recorded." So, yes, firms are still giddy (they've been 'optimistic' now for many months, in fact over a year), but they are not giddy about hordes of new orders arriving. Instead they are optimistic about the prospect of continued attrition wiping out more of their competitors or that they might pick some jobs as the derelict unfinished sites start crumbling down in earnest. Nice one.

14/5/2012: Irish Construction Sector PMIs for April 2012

The Irish Construction PMI published by the Ulster Bank posted another massive fall, declining to 45.4 in April, from 46.7 in March. This is the sharpest rate of decline in the sector since October 2011. 

Breakdown by sub-sector:

Which means that

1. Housing sector activity is now sharper than overall activity, for the first time in seven months and is sharpest since September 2011

1. Commercial sector activity is on shallower decrease path in April than in March, but nonetheless, there is no improvement, despite the claims by our development agencies and reports by some real estate houses that MNCs are literally falling over each other trying to build massive new facilities. 

11/4/2012: Irish Construction Sector PMI for March

Irish construction PMI for March 2012 (published by Ulster Bank) posted a 58th consecutive monthly contraction with a reading of 46.7 against 45.8 in February 2012. In other words, construction sector activity has now been below 50.0 reading every month since June 2007.

Commercial sector activity showed accelerating decline at 47.4 in march 2012 against 49.1 in February 2012. This puts to a test some of the assertions made in recent months by sector analysts and in the media that commercial construction activity is showing a rise on the foot of robust FDI investments.


Engineering sector activity - primarily driven by public projects - was showing decline at 37.0 in march, slower rate of decrease than consistent with 35.6 reading in February. Housing sector activity remained on a relatively constant rate of decline at 42.3 in March compared to 42.4 in February.


Desperate reports of some analysts have decided to focus "positive" attention on allegedly broadly unchnaged new orders sub'index and improved business sentiment. However, actual data release stated that (emphasis and commentary mine):

• New orders were broadly unchanged in March, having declined solidly in the preceding month (thus unchanged in March means unchanged from the losses sustained previously). Some firms indicated that small contracts had been secured during the month, but others indicated that a reluctance among clients to commit to projects had prevented a rise in new orders. (If this is a net positive, I should be probably joining the Russian Ballet)
• Business sentiment was at its highest since January 2007 in March and, as such, was the strongest since the current downturn in activity began (in June 2007). Exactly 46% of respondents  predict that activity will increase over the next 12 months, with signs of improving economic conditions and a forecast rise in new orders supporting optimism. (Alas, the Ulster Bank release fails to give us any data on business sentiment sub-index. In fact, this is the only indicator missing in the charts supplied by the Markit note).

What no report that I have seen so far mentions is that, per Ulster Bank-Markit note: Construction sector "workloads remained insufficient to generate a rise in employment in the sector during March. That said, staffing levels decreased at a rate that was much weaker than seen throughout much of the current downturn." So employment continues to drop. And profit margins are also continuing to fall: "The rate of input cost inflation accelerated for the third consecutive month in March, and was the fastest since April 2011. Higher prices for fuel and other oil-related products were reported by panellists."

On the foot of this information, and presumably with an aid of some tealeafs floating in a cuppa, one respectable analyst concluded (emphasis and commentary mine): unchanged new orders and unverifiable "spike" in business sentiment "...may tentatively signal that the Irish market is approaching stabilisation, albeit at a very depressed level." Ok, then, Bolshoi School is recruiting for Junior Infants... I am off for an audition.

25/3/2012: QNA Q4 2011 - Part 3

In part 1 of the QNA analysis we covered annual results for annual GDP and GNP in constant prices terms. Part 2 analysis focused on GDP/GNP gap and losses in national income compared to pre-crisis trend. Here, we cover some quarterly trends for GDP and GNP based on constant prices data.

Let's consider changes by sector:

• Agriculture, forestry and fishing sector output fell 5.1% yoy in Q4 2011 following a 9.34% rise yoy in Q3 2011. In Q4 2011 the sector accounted for just 1.26% of the total quarterly GDP. Compared to Q4 2007 the sector output is now down 6.0%.
• Industry output rose 2.3% yoy in Q4 2011 after rising 6.25% in Q3 2011. The sector is now accounting for 28.34% of the quarterly domestic output. Sector output is now down 3.3% when compared against Q4 2007.
• Building & Construction sub-sector of Industry sector posted yoy decline of 6.7% inQ4 2011 that follows on 39.32% drop in Q3 2011. The sub-sector is now accounting for just 2.62% of total output and is down 55.0% on Q4 2007.
• Distribution transport and communications sector shrunk 0.6% yoy in Q4 2011 which follows 4.99% drop in Q3 2011. The sector accounts for 13.23% of total output and is down 17.3% on Q4 2007.
• Public administration and defence sector shrunk 3.8% yoy in Q4 2011 which follows on a 6.53% contraction in Q3 2011. The sector now accounts for 3.58% of the domestic output and is down 6.5% on Q4 2007.
• Other services including rents output contracted 3.1% yoy in Q4 2011 following on a 5.14% contraction in Q3 2011. The sector accounts for 42.37% of the economy and is down 12.5% on Q4 2007.
• As the result of this, GDPat constant factor cost expanded in Q4 2011 by 1.1% yoy and this follows on a rise of 0.88% in Q3 2011. This metric of domestic output is now dow 10.6% on Q4 2007.
• Taxes net of subsidies are down 2.3% yoy in Q4 2011 and this follows a 2.76% drop in Q3 2011. This accounts for 9.70% of GDP and the category is now down 30.0% compared to Q4 2007.
• Headline GDP at constant market prices rose 0.7% yoy after expanding 0.52% in Q3 2011. The GDP at constant prices in Q4 2011 was 12.8 below that in Q4 2007.
• Net factor income from the rest of the world (aka largely transfer pricing net of receipts by Irish corporates and individuals on their foreign investments) grew 59.9% yoy in Q4 2011 which follows on 7.41% growth in Q3 2007. These transfers now account for 18.51% of our GDP and were running 10.0% ahead of the levels recorded in Q4 2007.
• Headline GNP in constant prices in Q4 2011 fell 7.1% yoy following a 1.18% contraction in Q3 2011. National income in constant prices is now 16.6% below that attained in Q4 2007.
• GDP/GNP gap stood at 18.51% in Q4 2011 slightly down on 20.18% in Q3 2011.

Charts:

More sectoral analysis to follow in the next post.

15/3/2012: Irish Building & Construction Sector Q4 2011

About six months ago I was told by a 'person in the know' that there is huge construction boom about to happen in Ireland as multinationals are allegedly fighting over each other over suitable new office facilities. May be. Or may be not. I am not in the business of building stuff, so would have to wait for a credible flow of news and data to confirm such a shift in the trends. Today's CSO stats on activity in Construction and Building sector is not exactly pointing to a massive uptick.

Let's take a look.

First, data for construction & building ex-civil engineering:

• Value index remained flat at 20.9 in Q4 2011, same as in Q3 2011. Year on year index is down 8.3%. 6mo average is now 0.2% ahead of previous 6mos average and year on year, 6mo average is down 12%. No improvement here. 
• Value of construction and building ex-civil engineering is now down to 18.4% of the peak level.
• Volume index also remained falt at 18.8 in Q4 2011 and Q3 2011, while year on year Q4 2011 index is down 5.5 on Q4 2010. 6mo average for the most recent 6 months is up 0.5% and year on yer last six months activity is down 9.2%. No improvements here either.
• Volume of construction and building ex-civil engineering is now 18.0% of the peak.

Chart to illustrate:

As annual rates of change suggest - things are getting worse at a slower speed.

In terms of civil engineering output:

• There was a substantial jump in civil engineering output value in Q4 2011 - up 27.7% qoq although still down 11.8% yoy. Latest 6mos average is 10.8% ahead of previous 6mo average and down 16% year on year.
• There was also a measurable increase in volume of civil engineering activity up 27.8% qoq inQ4 2011, although still 9.1% down yoy. 6mo average through December 2011 is 11.1% ahead of preceding 6mos period and 13.3% below the same period in 2010.

So some improvements here in quarterly series and dramatic ones, but still down yoy:

Lastly, residential v non-residential construction activity:

• Value of residential construction activity declined to  9.7 in Q4 2011 from 9.9 in Q3 2011. Value of residential construction sector activity is now 91.0% below its peak and is 90% below 2005 levels. Yar on year value of activity is down 21.1%. 
• Volume of residential sector activity slipped marginally to 8.9 inQ4 2011 from 9.0 in Q3 2011. Year on year the index is down 15.2% and relative to peak it is down 91.5%. Volume of construction activity in the residential sector is now down 91% on 2005 levels.
• Abysmal does not even begin to describe these results and there is no improvement in year on year performance since Q4 2006 in value and since Q1 2006 in volume terms.
• Non-residential activity in value terms improved slightly from 62.7 in Q3 2011 to 63.6 inQ4 2011 - marking second consecutive quarter of improvements. Yoy activity in Q4 2011 was up 1.1% - first yearly rise since Q4 2008. Relative to peak value of non-residential construction activity is still down 48.3%.
• Non-residential construction volume index also improved, marking third quarter of gains in a row, rising from 56.6 in Q3 2011 to 57.8 in Q4 2011. Annual rate of increase is now 4% and this is the first such gain since Q3 2007.

So on the net, some positive moves in non-residential construction which still require continued confirmation to the upside in the next 1-2 quarters in order to call the market bottom and a year or so more of consistent rises to call the upswing trend. Negative newsflow for residential, although some moderation in the rate of decline.