6/9/2013: Research into Public Sector Human Capital

Are public servants / civil servants intrinsically (ex ante) lazy or altruistic or both or neither? Not much of the debate about this academically so far, but here are three ground-breaking papers coming from German and global data (emphasis mine):

"Intrinsic Motivations of Public Sector Employees: Evidence for Germany " by Robert Dur and Robin Zoutenbierz (December 6, 2012: http://www.roa.unimaas.nl/seminars/pdf2013/Robert%20Dur.pdf)

Abstract: "We examine differences in altruism and laziness between public sector employees and private sector employees. Our theoretical model predicts that the likelihood of public sector employment increases with a worker's altruism, and increases or decreases with a worker's laziness depending on his altruism. Using data from the German SocioEconomic Panel Study, we find that public sector employees are significantly more altruistic and lazy than observationally equivalent private sector employees. A series of robustness checks show that these patterns are stronger among higher educated workers; that the sorting of altruistic people to the public sector takes place only within the caring industries; and that the difference in altruism is already present at the start of people's career, while the difference in laziness is only present for employees with sufficiently long work experience."


"Working for a Good Cause" by Robert Dur and Robin Zoutenbier (May 15, 2013, CESifo Working Paper Series No. 4227: http://ssrn.com/abstract=2265180)

Abstract: "A rich literature in public administration has shown that public sector employees have stronger altruistic motivations than private sector employees. Recent economic theories stress the importance of mission preferences, and predict that altruistic people sort into the public sector when they subscribe to its mission. This paper uses data from a representative survey among more than 30.000 employees from 50 countries to test this prediction. We find strong evidence for a mutually reinforcing role of altruism and mission alignment in sorting to the public sector, particularly among highly educated workers and among workers in less-developed countries."


"Public Sector Employees: Risk Averse and Altruistic?" by Buurman, Margaretha , Delfgaauw, Josse, Dur, Robert and Van den Bossche, Seth,  (June 28, 2012, CESifo Working Paper Series No. 3851: http://ssrn.com/abstract=2094954)

Abstract: "We assess whether public sector employees have a stronger inclination to serve others and are more risk averse than employees in the private sector. A unique feature of our study is that we use revealed rather than stated preferences data. Respondents of a large-scale survey were offered a substantial reward and could choose between a widely redeemable gift certificate, a lottery ticket, or making a donation to a charity. Our analysis shows that public sector employees are significantly less likely to choose the risky option (lottery) and, at the start of their career, significantly more likely to choose the pro-social option (charity). However, when tenure increases, this difference in pro-social inclinations disappears and, later on, even reverses. Further, our results suggest that quite a few public sector employees do not contribute to charity because they feel that they already contribute enough to society at work for too little pay."

Non-scientific polemic based on the above is here: http://opinion.financialpost.com/2013/07/23/william-watson-civil-servants-not-born-lazy-they-learn-it-at-work/

I presume there were no major errors in Excel spreadsheets anywhere around the above studies...

6/9/2013: Euromoney Country Risk Survey: Upgrading Irish Banking Sector Risks Outlook

Some good news for Ireland out of a number of surveys today. First, BlackRock Investment Institute survey of country experts shows Ireland improving economic outlook 6 months forward - details here: http://trueeconomics.blogspot.ie/2013/09/692013-blackrock-institute-survey-north.html

Now, Euromoney Country Risk survey shows significant improvements in market experts assessment of Irish banking sector stability:

While both reflect opinions of experts, including experts within the specific sectors, the two are good indicators of the general direction toward gradual improvement in country economic outlook. Let's hope the Budget 2014 and mortgages arrears workouts do not derail this trend.

6/9/2013: BlackRock Institute survey: EMEA: August 2013

BlackRock Investment Institute released its latest Economic Cycle Survey for EMEA region.
 Note: my note on survey results for North America & Western Europe is available here.

Per summary: "... this month’s EMEA Economic Cycle Survey presented a generally bullish outlook for the region. 

The consensus of respondents describe Slovenia, the Ukraine, Croatia, Egypt and Russia currently to be in a recessionary state, with an even split of economists gauging Slovakia to be in expansion or contraction. Over the next 2 quarters, all these countries are expected to stay in a recessionary state except Russia, Slovakia and Croatia. 

At the 12 month horizon, the positive theme continues with the consensus expecting all EMEA countries to strengthen or remain the same, with the exception of the Ukraine and Turkey."

Note: these views reflect opinions of survey respondents, not that of the BlackRock Investment Institute. Also note: cover of countries is relatively uneven, with some countries being assessed by a relatively small number of experts.

Here are two summary charts:

6/9/2013: BlackRock Institute survey: North America & Western Europe: August 2013

BlackRock Investment Institute released its latest Economic Cycle Survey for North America and Western Europe region.

Per summary: "This month’s North America and Western Europe Economic Cycle Survey presented an improvement in the outlook for global growth over the next 12 months – the net proportion of respondents with a positive outlook increased to 70% from 60% last month. 

The consensus outlook for the Eurozone was particularly positive, where the 6 month forward outlook shifted from 57% to 75% expecting the currency-bloc to move to an expansionary phase. 

The picture within the bloc was not uniform however, with most respondents expecting Portugal, Greece, Belgium and the Netherlands to remain in a recessionary phase, while the consensus has shifted to expect expansion for France, Spain, Finland and Ireland over the next 2 quarters. An even mix of economists expect Italy to be expansionary or recessionary at the 6 month horizon (and similarly so for Norway, outside of the currency-block). 

With regards to the US, the proportion of respondents expecting recession over the next 6 months remain low, with the consensus view firmly that North America as a whole is in mid-cycle expansion and remaining so through H2 2013."

Note: these views reflect opinions of survey respondents, not that of the BlackRock Investment Institute. Also note: cover of countries is relatively uneven, with some countries being assessed by a relatively small number of experts.

Here are two summary charts:

5/9/2013: WEF on Ireland's Competitiveness - detailed analysis

World Economic Forum Global Competitiveness Report 2013-2014 puts Ireland's competitiveness in 28th place, one position worse in global rankings than in 2012-2013 report. Here are summary stats.

First, top 30 countries (2013-2014 ranks) and their recent performance history:

Several points of note:

• Compared to two years ago, there is only one new addition to top 10 performers group: Hong Kong. Denmark - ranked 8th in 2011-2012 report is now ranked 15th.
• Switzerland and Singapore are unchallenged ranked 1 and 2.
  Despite a recession, Finland ranks ahead of Germany and in venerable 3rd place. Sweden, meanwhile, lost 3 places over the last two years.
• Ireland's competitiveness 'neighbourhood' now includes Brunei and Malaysia, with such 'stars' of global competitiveness as Saudi Arabia, UAE and Qatar outperforming Ireland significantly.
• China and Puerto Rico are snapping on our heels. Iceland, Estonia, Oman, and Chile are nearby as well.
• We ranked 9th in EU18 euro area.

Ireland's relatively poor performance is highlighted in the following table, showing our overall decline from 22nd position worldwide in 2008-2009 to 28th in 2013-2014 reports. Blue colour codes improvements on 2008-2009 ranks and red codes deterioration in rankings.

The table above shows that Irish rankings are severely depressed by the Macroeconomic Stability (134th), Financial Markets Sophistication (85th) and Market Size (57th). We can't do much about the latter one, of course. We rank below where we should be in terms of Infrastructure (26th) and in terms of Institutions (16th), Higher Education and Training (18th), Labour Market Efficiency (16th), as well as across both sub-components of Innovation factors.

Full report is available here: http://www.weforum.org/content/pages/competitiveness-library and on page 222 there is a handy summary for Ireland's scores. Here's a chart mapping Ireland relative to its peers average:

There is very little in the above chart that distinguishes Ireland to the better side of the average Innovation-driven economy. The largest gaps in our favour are found in Goods Market efficiency (largely thanks to the EU common trade area, plus our severe dependency on imports, normal for a small open economy), and Institutions (ditto for the EU, plus common law etc). Best way to describe us, using the above chart - abstracting away from Macroeconomic and Banking crises - is average for our group.

In case you think otherwise, our own assessments confirm the above conclusion:

Notice that - again aside from the financial crisis - our top 5 drags on performance are: Inefficient government bureaucracy; Inadequate supply of infrastructure; Insufficient capacity to innovate and Tax rates. All are of our own making.

Should you care to see more: here are the details. Reading the below, keep in mind, we really should be aiming to be in top 12-15 in the world, if not better. We certainly market ourselves as if we are in top 10 at the very least...

5/9/2013: ECB Boldly Goes Nowhere... again

The longer it lasts, the uglier it gets... ECB stays put (predictably) on rates today is adding 57th month that the policy rates are deviating from the historical mean, with the 'hill' to mean reversion getting steeper:

Currently, mean-reversion implies an almost 200bps hike without overshooting. Factoring in historical overshooting, we are into 250-300bps territory. Good luck thinking that 'gentle' tapering or 'gradual' restoration or whatever else you might call it going to be painless...

Oh, and for all of this, what do we have on the rates side?

At least, for its pain, the Fed has boldly gone where no one, save for Japan, have travelled before when it comes to rates. Euro area, meanwhile, has been playing chicken with itself...

5/9/2013: IBM: 64% of global CMOs want to approach customers as individuals

Since 2009, IBM Institute for Business Value has been surveying C-level executives around the world to  assess the development of digital economy.

Recently, IBM released some headline numbers for the forthcoming (October) survey for 2013:

• 64% of CMOs want to approach customers as individuals
• 71% of CIOs see communication moving towards more social/digital collaboration
• Majority (55%) of CHROs foresee increasing organisational openness
• Just 34% of organisations have an in-depth understanding of their customers
• But 78% expect their organisations to have an in-depth understanding of their customers by 2017
• Only 1 in 5 organisations has the capacity to use Big Data with just 40% intergating internal and external data sources, just 18% using Big Data to identify new products and services
• 77% of all CFOs support products and services innovation

Handy info graphic (you can click on it to enlarge):

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.

5/9/2013: A Cautionary Note on Irish Services PMIs

having just written about the Irish Services PMI performance in August, here's an update on the link between PMI and actual Services Activity Index, published by the CSO (one month lag).

The latest data from CSO on Services Index will be analysed in the subsequent post, but for now a health warning reminder: Services PMI has barely any bearing on the actual Services activities in Irish economy:

Basically, correlation - from January 2009 through July 2013 - between the Services PMI and CSO Services Activity Index is exceptionally poor: it stands at just 0.1367. Services PMI readings have no explanatory power when it comes to tracking performance of the Services Activity Index. On log-changes chart, PMI is capable of capturing just 0.0071% of variation in Services Activity Index. On straight levels even less. Lags are not yielding any meaningful improvements in explanatory power, neither do non-linear models.

In my view, this testifies to the extreme skews in PMI survey data to reflect the role of MNCs in ICT and IFSC sectors here.

5/9/2013: OECD Migration report 2013: Ireland's blues

Last week, OECD published its International Migration Outlook 2013. I wrote about this in the box-out section of my Sunday Times column which is available here in an unedited version: http://trueeconomics.blogspot.ie/2013/09/592013-sunday-times-september-1.html

Couple of charts to illustrate the actual findings from the OECD:

These show pretty severe adverse impact of immigration on Irish exchequer finances, driven primarily by (in descending order of importance):

1. The extent of the current crisis
2. The impact of immigration flows composition on transmitting the shocks of unemployment to exchequer balance sheet (exceptionally rapid replacement of previously jobs-linked immigration inflows prior to 2004 with post-2004 opportunistic immigration from the EU Accession states, primarily going to short-term jobs in construction and domestic services sectors)
3. The impact of the Government policies since 2000-2001 that raised significantly spending on social welfare

The problem, of course, is that the latest Government policies, acting to limit access to Irish labour market for non-EU nationals continues to reinforce the second point above. We are increasingly trading on the assumption that Accession states' nationals regardless of their skills can act as a substitute for highly skilled and perfectly selected into jobs candidates from the rest of the world. Not exactly a smart policy, folks…

In 2006 I wrote about this effect on selection bias in Irish immigration policies post-2004 for the Romanian Journal of European Studies: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1100952 Seems like my warnings came to the front in the OECD data.

5/9/2013: Sunday Times, September 1: Mortgages Defaults & Arrears

This is an unedited version of my Sunday Times column from September 1, 2013.


As the great 17th century German mathematician and philosopher Gottfried Wilhelm Leibniz said: "There are two kinds of truths: those of reasoning and those of fact. The truths of reasoning are necessary and their opposite is impossible; the truths of fact are contingent and their opposites are possible."  In other words, facts can be contradicted, properly structured reasoning cannot.

Recent debate in Ireland surrounding the issue of mortgages arrears and strategic defaults is the case in point. Based on simple extrapolations of evidence collected in the economies with regulatory and social environments largely alien to Ireland, it clashes with the very logic of the regulatory and policy changes we have put in place.

The conjecture is that between 20 and 40 percent of all mortgages arrears in Ireland are 'strategic' in nature. Most likely, this is an over-exaggeration, although we do not know with certainty. However, the incontrovertible truth that this conjecture helps to obscure is that the mortgages arrears crisis is structural and unyielding to the solutions proposed so far. The reason tells us that the mortgages arrears crisis can only be dealt with through the means of a systematic resolution approach.


To-date, no bank in Ireland has completed a full assessment of the extent of strategic defaults amongst the mortgages in arrears held on its books. In the end of Q2 2013, Irish banks held 100,920 restructured mortgages loans. We do not know how many of these relate to strategic defaults. The banks failure to report actual hard numbers suggests that they have not succeeded in identifying many such cases. Thus, factually, five years into the mortgages crisis, we have no evidence as to whether or not strategic arrears are a widespread problem. This lack of evidence is either down to the banks own choices not to analyse the data or their unwillingness to report the results of their analysis.

As the result, we lack not only the crucial evidence to tell how many borrowers are tempting to game the system, but also any knowledge as to what might be driving them to do so.

Finance literature defines strategic defaults as a scenario where mortgagees can afford to pay their mortgage bill, but opt not to do so because walking away from the loan offers them a chance to reduce their financial losses over time. Under this definition, strategic defaults generally arise in the cases of severe negative equity.

Do we have strategic defaulters in Ireland? Reason suggests the answer to this question is yes we do. Is the problem as large as to cover 20 to 40 percent of all distressed borrowers? Logic implies that the answer to this question is no.

Suppose the claim of massive strategic defaults was true. Given property prices dynamics in Ireland over the last 6 years, this means that the bulk of such defaults should have occurred back around the 2010-2011, before the rate of property prices declines slowed down substantially. In terms of mortgages arrears data, the above suggests that arrears of over 360 days duration would be more likely candidates for representing strategic defaults. This is further supported by the fact that over the last 12-15 months, Irish authorities have stepped up the rhetoric against the alleged abusers of the system, and implemented well-publicised legislative and regulatory changes, such as the Personal Insolvency Bill, limiting the incentives for such behaviour.

Now, let's do some sums. Based on the Central Bank data, if strategic defaults were really covering between 20 and 40 percent of total mortgages arrears in Ireland, the number of such cases will be somewhere between 36,000 and 73,000 accounts. These would amount to between 48 and 96 percent of all accounts that are in arrears for over 360 days in the country. In other words, based on these claims, at least half of all longer-term arrears in the country could be suspected of being in a strategic default.

That's pretty extreme of a statement to be plausible. Crucially, such a claim is not consistent with what we can expect from the changes in policies and increased banks scrutiny. More likely, strategic defaults problem is more prevalent in the buy-to-let segment of the credit markets and here it might reach, say 20 percent of all loans in arrears. This would suggest that across all mortgages, including primary residences, there may be some 22,000-25,000 suspect mortgages or just 12 percent of all accounts in arrears. This would be a significant number, but a far cry from the claims put forward by the banks and some analysts.


However, the strategic arrears argument is just a red herring, designed to draw our attention away from ‘the truth of reasoning’, to use Leibniz’s terminology, that clearly shows that Irish mortgages arrears crisis is continuing unabated.

Quarter on quarter, defaults are up across all categories of mortgages, by numbers of accounts, outstanding volumes of loans and levels of built up arrears. Year on year the arrears are rising at double-digit rates. Total arrears now number 182,840 accounts, representing EUR36.6 billion in outstanding loans. The latter figure is growing at almost 10 percent annually. Given current property valuations and the costs of recovery on foreclosed mortgages, reported by the banks to-date, these represent a system-wide loss of ca EUR11-12 billion, hidden on the books. That is before we factor in the inevitable adverse impact of mass-repossessions on the market prices or high costs of personal insolvency resolution.

For Irish banks (as opposed to foreign banks) the above potential losses are closer to EUR6.5-7.5 billion. March 2011 stress tests were based on the Central Bank 2011-2013 projected losses of EUR5.8-9.5 billion for mortgages across Irish banks. In other words, the scenario that the 2011-2013 actual losses booked by the banks, plus the potential losses built up in the arrears will exceed the 2011 stress tests' capital allocations is now highly probable.


The only hope of avoiding another banking crisis, therefore, is that the system can somehow delay recognising the arrears-related losses. The argument that there are huge strategic default numbers hidden in arrears figures helps this, as it suggests that the banks can recover the losses associated with these abuses.

Alas, the strategic defaults are unlikely to be significant enough to help the banks. At the same time, it is hard to imagine that a significant delay to losses recognition can be brought to bear by the policy changes put in place to deal with the mortgages arrears.

Currently, banks hold 1,503 repossessed properties, a number that is still tiny compared to the overall default rates, signaled by mortgages over 720 days in arrears, which number 39,093 accounts and amount to EUR9,358 billion in lending. Thus, over a quarter of all mortgages in arrears are now in default for more than 2 years continually. Many of these are non-reparable. The rates of recovery on these mortgages are unlikely to be more than 40-50 cents on the euro.

Amortising such losses over six-to-seven years period - as envisaged under the reformed personal insolvency regime - may not be an option as to-date the regulators and the banks have been serially failing to deliver sustainable, long-term solutions to arrears.

Data on mortgages that have been restructured by the banks shows that restructuring of the loans is proceeding without any major change in either the mix of solutions offered or the rates of improvement on arrears achieved. At the end of June, only 55 percent of all restructured loans were not in arrears, which is virtually unchanged compared to Q3 2012, the earliest quarter for which we have comparable data.

The risk of default for restructured mortgages is even more significant when we consider the types of arrangements put in place in restructuring. Some 50 percent of all restructurings involve temporary switches to interest only payments or reduced payments of capital component. Eight out of ten restructured mortgages give only temporary reprieve to the borrowers. In effect, of the total of 21,563 principal residences accounts restructured through the end of June 2013, around 20,520 accounts have been restructured so as to potentially either increase or leave unaltered the overall volume of debt over the life-time of the mortgage. Instead of reducing debt burden, our 'solutions' to the mortgages crisis are increasing it.

The overall levels of mortgages that are at risk of default or defaulted continues to climb. Total number of mortgages at risk currently stands at 239,834 accounts, up 11.3 percent year on year in Q2 2013. These represent ca EUR47 billion worth of mortgages or more than one third of all residential lending in the country, up on 29.5 percent a year ago. The systemic risk to the system is rising despite some nascent stabilisation experienced in the property prices and overall macroeconomic conditions, and despite the historically low cost of credit.

The economy is hurling at a breakneck speed toward mass households insolvencies and large scale repossessions over the next 1-3 years. The logic of reality is constantly negating the factoids of the official analysis.

To break this vicious cycle we need to change our modus operandi.

Firstly, we must produce an independent and credible assessment of the problem of strategic defaults. The end-game here should be putting in place a system of evidence-based monitoring and evaluation of defaulting borrowers that is transparent, independent of the banks and accessible to all those involved in structuring long-term solutions. Anyone found genuinely guilty of gaming the system must be forced to bear the full burden of their actions.

Secondly, we need to set a mandatory, clearly priced and transparently administered menu of long-term solutions. All banks must be compelled to offer these to their borrowers.

Thirdly, we need to put in place a system of independent oversight and arbitration over the solutions offered by the banks.

Without swiftly dealing with the strategic defaults and with the problem of structuring, pricing and deploying long-term solutions, Ireland is risking a repeat of the acute banking crisis over 2014-2016. Navigating the world of contingent facts requires more than extrapolating foreign studies to domestic environment. It requires proper logic and reasoning as the backing to policies and systems we deploy.

BOX-OUT:

This week, the OECD published an assessment of the effects of immigration on the member states economies. On average, across the OECD, immigrants contribute positively to the host countries' exchequers, with a net contribution of 0.4-0.57 percent of GDP. In today's Ireland immigrants' contribution to the state purse, net of benefits received, is negative at -0.23 to -0.39 percent of GDP. There is no discernible difference between native and foreign born employment rates in Ireland in 2012. There is a relatively large difference in unemployment rates between the native- and foreign-born sub-populations, that is especially pronounced for women. OECD data puts Ireland in the 8th worst position in the OECD in terms of labour markets effects of immigration and the second worst position in terms of the immigration effects on public finances. Given the fact that Ireland is continuously attracting large numbers of highly-skilled, fully employed, young and tax-compliant professionals, the above findings suggest that Irish aggregate figures are more reflective of the economic impact of the two other major cohorts of immigrants. These are: immigrants who arrived in 2001-2008 from the EU Accession states and those who arrive for family reunification reasons. However, per OECD data, the latter cohort, actually makes a larger positive contributors to the state finances any other type of the household, including the native households. This leaves immigrants from the EU Accession states, most severely hit by the collapse of building and construction and domestic services sectors in Irish economy during the crisis, as the cohort behind the overall negative findings. The point is that, traditionally, stock of immigrants in a host economy acts as one of the automatic stabilisers - a factor that adjusts on its own to reflect the prevailing economic conditions, shrinking in the recession and expanding in recoveries. In modern Ireland, one of the legacies of the 2001-2007 bubble, is that instead of stabilising economic activity, immigration might have acted to amplify the crisis.

5/9/2013: Services PMI: August 2013

With a delay (due to extenuating circumstances) - here's my analysis of dynamics of the Services PMI for August for Ireland.

Yesterday's reading on Services PMI was spectacular by all measures:

• Headline  index rose to 61.6 in August 2013, the highest reading since February 2007 and 19th highest reading in history of the index.
• August reading marked the third consecutive month of index reaching statistically significant levels of growth.
• 12mo MA is now at expansionary 55.6, 6mo MA at 55.7 and 3mo MA at 58.0. These readings should signal a break in the third recessionary dip we have experienced.
• Current 3mo MA is solidly ahead of 3mo MA through May (53.4) and is ahead of same averages for 2012, 2011 and 2010.

The most critical bit, however, is that this is the first time now that the PMI has breached the levels consistent with the pre-crisis activity. This is not to say we are heading for 4.4-4.6% annual GDP growth, but it is significant nonetheless. 

All-in - very solid expansion, very solid reading and starting from actually high levels of activity to begin with.

We do not have - courtesy of Investec and Markit deciding to cut back the information they release to us, mere mortals - the actual composition details or the breakdown by sector. However, per Markit release, most of the growth is accounted for by booming IFSC. The overall Services PMI is very significantly skewed in the direction of MNCs (as I showed on a number of occasions).