5/1/21: Ireland PMIs: 4Q 2020

Ireland's economic activity improved significantly in December, and the improvements were marked across all three sectors:

• Ireland's Manufacturing PMI rose 52.2 in November to 57.2 in December, marking the third consecutive month of > 50 readings, the second consecutive month of indicator being statistically above 50.0 line. The last three months average (53.23) is on 2Q 2020 average (53.30) and this is pretty encouraging, given the weakness in the indicator over 1H 2020. 
• Ireland's Services PMI also rose in December, reaching 50.1 from recessionary 45.4 in November. 4Q average is still weak at 47.9 (contractionary) after being effectively stagnant at 50.03 over 3Q 2020. Monthly increase in December, however, is a brighter spot.
• Ireland's Construction sector PMI (data through mid-December) is at 53.5, which is strong compared to month prior (48.6) and the first time the index is above 50 line since July 2020. 
• Official Composite PMI that accounts only for two sectors of activity (Manufacturing and Services) is now at 53.4, having broken above the 50.0 line for the first time since August 2020.

As you know,  I calculate my own index of economic activity based on all three sectors PMIs and using relative weights of each sector in Irish Gross Value Added, based on the latest National Accounts data. This is plotted against Markit's Composite PMI in the following chart:

Just as Composite PMI, my index of economic activity also rose in December (to 52.9) from 48.2 in November. This marks the first month of above-50 readings after 3 consecutive months of contraction. Nonetheless, 4Q 2020 index is at 50.03 - signaling zero growth q/q and this stands contrasted to 3Q 2020 reading of 51.2 (statistically zero growth, nominally, weak positive growth).

3/12/20: Ireland PMIs: November

 

Ireland PMIs are out for November and they show the impact of the re-amplification of COVID19 impacts on the economy.

Services PMI fell from 48.3 in October to 45.4 in November, the lowest reading in 5 months and the third consecutive monthly reading sub-50. The pandemic period average is now at 39.3.

Meanwhile, Manufacturing PMI rose from 50.3 in October to 52.2 in November, marking the second consecutive month of readings above 50.0 mark. Pandemic period average is now at 48.2. 

Construction sector PMI (through mid-November) is at 48.6 - marking third consecutive month of sub-50 readings.

As the chart below illustrates, Manufacturing is the only sector that is providing growth momentum in the economy and much of that is down to multinationals. In services sector, activity of multinationals (which are doing well) is more than offset by continued declines in activities of domestic enterprises. 

Composite PMI posted a third consecutive month of sub-50 readings at 47.7 down from 49.0 in October. Markit's Composite PMI is calculated based on manufacturing and services indices. To rebalance the overall activity measure to include construction PMIs, I calculate my own 3-sectors index which is based on each sector contribution to Ireland's gross value added. With economic activity shifting toward manufacturing during the Covid19 pandemic, this index is becoming more weighted to reflect manufacturing sector PMI, hence the 3-sectors index rose in November to 50.2 from 49.7 in October.

Overall, the PMIs and my 3-sectors index are all pointing to entrenchment of the Covid19 pandemic headwinds in the Irish economic activity in November. 

3/11/20: Ireland PMIs and Economic Activity Dynamics for October

October PMI data for Ireland is showing serious strains from the pandemic and wave 2 on the economic activity: 

• Manufacturing PMI for October came at a recessionary 48.3, marking a moderation on rapid contraction in the sector activity in September (45.8). This marks the second consecutive month of the Manufacturing PMI reading sub-50, and follows two months of partial (at best) recovery in July and August.
• Services sector PMI for October was at 50.3 - a statistically indifferent reading from zero growth 50.0 recorded in September.
• Official Composite PMI was at 49.0 in October, up on 46.9 in September, but still marking a decline in economic activity for the second month in a row. 
• Since Construction sector PMI is not published until mid-month, we only have September reading for the sector. Based on this, my three-sectors activity indicator that weighs all three sectors based on their contribution to the gross value added has rise to 49.05 from 47.48 in September:

Overall, all PMIs point to a significant weakness in the economy in September continuing into October. Keep in mind that PMIs are effectively cumulative: sub-50 reading in September implies a decline in economic activity relative to August. If this is followed by a sub-50 reading in October, the new decline is being signalled is on already diminished September activity.

12/10/20: Ireland PMIs and Economic Activity Dynamics for September

 

September data on Irish Purchasing Managers Indices is now complete (with Construction sector reporting last), and the signals coming from the data are not pretty:

Services sector activity is back in contraction: September reading of 45.8 shows relatively sharp downward momentum, swinging 6.6 points on August reading. September reading is statistically below 50.0 zero growth line, and below historical mean (55.0).

Manufacturing sector reading is at stagnation 50.0 in September, down from 52.3 in August. Statistically, September reading is below historical average of 51.4.

Construction sector is posting a second consecutive month of contraction at 47.0 in September. The reading is statistically below both the historical mean and the median, as well as below 50.0 zero growth line.

This means that official composite PMI (which does not include Construction sector index) is now at 46.9, statistically signalling economic contraction. September index is statistically below index median, although it is statistically indistinguishable for the historical average (which, owing to massive volatility in recent months sits at 49.8).

Chart above shows my own 3-Sectors Index of economic activity, integrating Manufacturing, Services and Construction sectors PMIs, weighted by their relative contributions to Gross Value Added. 3 Sectors Index has fallen from 52.1 in August to 47.5 in September. August reading by itself was not impressive: it was statistically below the historical average and the median, and was barely statistically significantly above 50.0 zero growth line. September reading is very poor, indicating a return of recessionary dynamics in the Irish economy in a critical month of September that normally marks strong growth month for the economy.

9/8/20: Ireland PMIs and Economic Activity Dynamics for August

Ireland's PMIs are signalling a cautious recovery in the growth dynamics across three sectors, with growth still underperforming historical averages.

Irish Services Sector PMI rose to a respectable 52.4 in August from 51.9 in July, with the latest index reading sitting 38.5 points above April 2020 COVID-19 pandemic lows. However, statistically, the index remains below historical average of 55.0 and the median of 56.8. In other words, second month post-contraction phase of the pandemic, Irish services sectors are still struggling to restore growth (not levels) in activity consistent with a robust recovery.

Irish Manufacturing Sector PMI fell to 52.3 in August from July's 57.3 reading. The series are generally more subdued than Services PMI, which means that August reading is statistically indistinguishable from the historical average of 51.5 and is bang-on the median of 52.31. Manufacturing activity swung 16.3 points between COVID19 trough and August reading. Overall, Manufacturing growth seems to have fallen off the post-COVID19 high.

Irish official Composite (two sectors) PMI is currently at 54.0 which is statistically at the historically median rate of growth. The series are too short to talk about averages and historical comparatives in any serious terms. 

Irish Construction Sector PMI (not included in the official Composite PMI) came in at 52.3 in August, up from 51.9 in July and 48.7 points above the COVID19 trough in April. Current reading is statistically above the historical average, but identical to the historical median. This suggests that much of the rebound can be down to seasonal and cyclical volatility, as opposed to thee genuine recovery. 

Here is a summary chart of the three sectors dynamics:

I compute my own GVA-shares-weighted 3-sectors Activity Index, using all three sectoral PMIs reported by IHS Markit. The 3-Sectors Activity Index currently sits at 52.4, down from 54.1 in July and up 30.1 points on COVID19 trough. The current growth in economic activity in Ireland is statistically below historical average, and historical median. And it has moderated from July high, suggesting that the economy is still struggling to recover levels of activity lost to the COVID19 pandemic.

3/12/2014: Irish Services PMI: November

Strong Services PMI performance for Ireland in November with Markit/Investec PMI index for the sector rising to 61.6 from already boiling-high of 61.5 in October. This marks ninth (!) consecutive month of readings above 60.0 (not just 50.0) and the 12mo MA through November is currently running at a massive 61.4.

Shorter-term dynamics are very positive: 3mo MA through November is at 61.9 and this is only marginally lower than 3mo MA through August 2014 at 62.1. The numbers are simply surreally good.

The trend is very similar in Manufacturing (see chart below and note here: http://trueeconomics.blogspot.ie/2014/12/1122014-irish-manufacturing-pmi.html).

Without knowing actual details on disaggregation of the total indices, it is hard to say what is going up and at what rate. Furthermore, again due to Markit/Investec refusal to publish actual data details, I have no idea which sectors are rowing what in both services and manufacturing. My suspicion is that we are seeing continued boom in MNCs-dominated sectors, driven in part even higher by the changes in the MNCs-based operations in Ireland away from profit shifting to either profit booking and/or cost centres. In other words, instead of shifting profits via Ireland to offshore locations, many MNCs are starting to book costs into Ireland or park profits here. All of these activities are net positive for GDP and GNP, albeit of dubious benefit to those of us living here.

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.

5/6/2014: Irish Manufacturing & Services PMIs: May 2014

Both, Irish Services and Manufacturing PMIs are now out for May 2014 (via Markit and Investec Ireland) and it is time to update my monthly, quarterly and composite series.

In this post, let's first cover the core components in monthly series terms:

1. Manufacturing PMI eased from 56.1 in April to 55.0 in May - a decrease that reduced the implied estimated rate of growth in the sector. Still, Manufacturing index is reading above 50.0 (expansion line) continuously now since June 2013. 3mo MA through May is at 54.8 - solid expansion and is ahead of 3mo average through February which stood at 53.1. So expansion accelerated on 3mo MA basis. The current 3mo MA is ahead of 2010, 2011 and 2013 periods readings. Over the last 12 months there have been only 3 months with monthly reductions in PMIs: November 2013 (-2.5 points), January 2014 (-0.7 points) and May 2014 (-1.1 points).
2. Services PMI eased only marginally from 61.9 in April to 61.7 in May - this implies that services sector growth barely registered a decline and remained at a blistering 61-62 reading level. Services index is reading above 50.0 (expansion line) continuously now since July 2012, helped no doubt by a massive expansion of ICT services MNCs in Ireland, which have little to do with the actual economic activity here. 3mo MA through May is at 60.0 - solid expansion and only slightly below 3mo average through February which stood at 60.3. The current 3mo MA is ahead of 2010, 2011 and 2013 periods readings. Over the last 12 months there have been 5 months with monthly reductions in PMIs, all sharper than the one registered in May 2014.

Here are two charts showing historical trends for the series:

The two series signal economic expansion across both sectors in contrast to May 2012 and 2013:

In line with the above chart, rolling correlations between the two PMIs have firmed up as well over recent months, rising from 0.33 in 3mo through February 2014 to 0.5 for the 3mo period through May 2014.

We will not have an update on Construction sector PMI (Markit & Ulster Bank) until mid-month, so here is the latest data as it stands:

• In April 2014, Construction sector activity index rose to 63.5 from 60.2 in March 2014. This marks second consecutive month of m/m increases. In the last 12 months, there have been 7 monthly m/m rises in the index and index has been returning readings above 50 since September 2013.

Core takeaways:

• Both services and manufacturing sectors PMIs are signaling solid growth in the economy,
• Jointly, the two indices are co-trending well
• Caveats as usual are: MNCs dominance in the indices dynamics and shorter duration of statistically significant readings above 50.0 line: Manufacturing shows only last three consecutive months with readings statistically significantly in growth territory; while Services index producing statistically significant readings above 50 for the last 6 months.
• Last caveat - weak relationship remains between actual measured activity in the sectors and the PMI signals: http://trueeconomics.blogspot.ie/2014/05/1552014-pmis-and-actual-activity.html

Next post will cover quarterly data and composite PMI.

8/5/2014: Irish Manufacturing & Services PMIs: April 2014

Irish Manufacturing and Services PMIs were out for April both showing aggregate gains, both not reported sufficiently in terms of data coverage to make any verifiable statements about composition of these gains.

Let's start from Manufacturing figures first:

• April 2014 PMI reading was at 56.1 - which is well above statistically significant bound of expansion. 
• 3mo MA through April is now at 54.8, some 1.9 points above 3mo MA reading though January 2014 and 5.5 points ahead y/y. Both good indicators of improving growth in the sector.

On Services side:

• April 2014 PMI reading was at blistering 61.9 - which is strongly above statistically significant bound of expansion. 
• 3mo MA through April is now at 60.0, basically flat on 3mo MA reading though January 2014 (60.13) and 2.8 points ahead y/y. Both good indicators of continued strong growth in the sector.

However, 3mo MA on 3mo MA changes are not spectacular in Services sector, as the chart below shows. This might simply be due to already sky-high readings attained in recent months.

Both indices show expansion in the economy (a changed from same period 2013) and as the chart below shows, correlation between the two indices is running strong (both co-move currently).

So based on top-level data, things are improving. The caveats are as usual:

1. We have no idea what is happening on the underlying side of the above stats as Investec & Markit no longer make available sub-indices information
2. Much of the PMIs-signalled activity is not coinciding with actual activity on the ground over the medium term (although some indications are that once we are firmly on growth trend path, the two sets of data - CSO and PMIs - will start comoving again).

In short, just as sell-side stockbrokers reports and Consumer Confidence Indicator, PMIs are least useful in telling the real story just when the demand for such story is most acute. 

2/4/2014: Irish Manufacturing PMI: March 2014

We now have Manufacturing PMI for Ireland for Q1 2014, so here are couple updated charts:

Few notable things in the above:

1. PMI now solidly above the 'statistical significance' range for the first time since October 2013. Also, March 2014 marks eighth consecutive month of PMI ahead of its post-crisis average (from January 2011).
2. The post-crisis average is still lower than pre-crisis average.
3. PMI continues to trend up with new short-term trend running from around June 2013.
4. 12mo average is at solid 52.1 and 3mo average through March (Q1 2014) is at 53.7 which is basically identical to 3mo average through December 2013 (Q4 2013) which is 53.6. 
5. Q1 2014 average is above same period reading for 2011 (49.8) and 2012 (50.1), but it is below same period 2010 average (56.1).

Key takeaway: solid PMI reading for Irish manufacturing - a good thing. As I noted before, Manufacturing PMI has stronger link to our GDP and actual industry output than Services PMI, so this is a net positive for the economy.

10/2/2014: Irish Services & Manufacturing PMI, January 2014

While on the topic of PMIs (see Construction PMIs update here: http://trueeconomics.blogspot.ie/2014/02/1022014-ulster-bank-construction-pmis.html), let's update also Manufacturing and Services PMIs data.

Services:

• January Services PMI index slipped slightly to 61.5 from 61.8 in December 2013. The deterioration was not material from statistical point of view, so the index remains effectively at the high level for the last 12 months.
• 3mo MA through January 2014 was 60.1 - above 56.2 in the same period through January 2013, and ahead of 3mo MA through November 2013. This is good news as it allows for some correction in monthly series volatility.
• The series are above their crisis-period trend and are still trending up.
• The index is now above 50.0 since August 2012 - a solid performance, with the rates of growth being on average above 60.0 since at least July 2013.

Manufacturing: 

• January Manufacturing PMI index also moderated to 52.8 from 53.5 in December 2013, with this moderation being significant, albeit shallow.
• On a 3mo MA average, index is at 52.9, which is ahead of 51.4 in the same period of 2013 and is ahead of the 3mo MA through November 2013.
• The index readings have rested above 50.0 nominally since June 2013, although they are significantly (statistically) above 50.0 for a shorter period of time, from somewhere around September 2013.

Overall, January posted slowdown in both indices growth, and 3mo MA for growth rates in the index is now negative for Manufacturing, and moderately positive for Services.

Longer-range good news is highlighted in the next chart, showing that in January 2014, levels of two PMIs were consistent with expansion across both sectors, contrasting the situation in January 2012 and January 2013.

Top level conclusion: The numbers show a good start to 2014, but Manufacturing remains a weaker point for the economy. Given monthly volatility in the indices, we need to see more data from PMIs to call the 2014 trends


As usual, the caveats apply: I have no data on sub-components of both PMIs - the core information that is no longer being made public by Investec and Markit (the publishers of the two series). Unfortunately, this means I no longer cover the two organisations' analysis of the components as these are unverifiable and statistically no longer testable.

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.

6/1/2014: Services PMI: December 2013

Markit/Investec Services Sector PMI for Ireland for December 2013 is out today, showing accelerated pace of growth in the sector. Per release: "The rate of growth in Irish service sector activity picked up at the end of 2013 as strengthening economic conditions contributed to a sharp rise in new business. The rate of job creation also accelerated during the month. Part of the strength in new orders was reflective of output price reductions, with discounts offered in spite of a faster increase in input costs."

The release goes on to note that "The rate of expansion in new business quickened for the third month running and was the sharpest since February 2007."

Overall, Q1 2013 average PMI in Services stood at 54.2,basically identical to 54.27 average for Q2 2013. This rose to 58.67 in Q3 and to 59.67 in Q4 2013. Year on year, Q4 2013 is now up from 56.0. Q4 2013 average is the strongest in 4 years running.

The PMI index is now above 50.0, adjusting for statistical significance, for 7 months in a row.

Charts to illustrate:

More analysis to follow, so 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.

3/10/2013: Services PMI: September 2013

Markit and Investec released Services PMI survey press release for Ireland. As usual - the note is full of statements that can not be confirmed by information contained in the note itself.

On the side that can be reported/interpreted:

• PMI slipped from what appeared to be an unlikely jump to 61.6 in August to slightly lower, yet still strongly-expansionary 56.8. This is still a robust rate of growth. 
• I cannot tell if it was driven by a handful of MNCs or was broadly-based. Allegedly, the UK was the main source of strength for new exports orders, which are expanding, seemingly (reading the Markit release) at a more modest pace than headline PMI indicates. The UK receives huge volume of exports from Ireland on ICT services side (the likes of Google et al) and this is the major point of contention the UK Government has with Irish tax structures, so it might be that much of the services exports 'boost' comes from transfer pricing.

• Dynamics are good: there is new upward sub-trend established since September 2012 and this breaks the period of flat trend between September 2010 and September 2012. 
• Significantly, since around September 2012 the series have been - on average - in the statistically-significant zone of expansion (again, distinct from September 2010-September 2012 period when expansions on average were not statistically significant).

• On quarterly averages basis: Q1 2013 came in at 53.7, Q2 at 54.3 and Q3 came in at 58.7. Sounds impressive, however, if we account for the freakishly high reading in August (partially and imperfectly controlling for weather effects) the Q3 average sits within 55-56 range. Thus even with weather effects taken out, the overall Q3 result is strong.
• On annual basis, using quarterly averages: Q3 2010 stood at 52.5, Q3 2011 at 51.4, Q3 2012 at 51.6 and the current running average is well ahead of all of these, even if we take adjustment for unusually good weather.

Overall: good numbers. However, we have no tangible information as to the movements on profit margins, employment, export orders, new orders etc. You should read this note on some caution regarding interpreting PMI for Services for Ireland: http://trueeconomics.blogspot.ie/2013/09/592013-cautionary-note-on-irish.html. Combined analysis of Manufacturing and Services PMIs to follow shortly.

Note: To add to this, I have now been seemingly removed from the mailing list for the slightly more detailed version of release (or Investec stopped supplying one altogether). 

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.