Irish industrial production + services fell in August; Recall the excitable PMIs?

Irish Economy
Irish industrial production + services fell in August; Recall the excitable PMIs?
By Michael Hennigan, Finfacts founder and editor
Oct 7, 2014 - 1:48 PM

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Both Irish industrial production and the monthly services index fell in August according to the CSO today -- which could be attributed to volatility but remember the headlines in early September following the publication of PMI (purchasing managers' index) surveys that manufacturing activity rose to a 15-year high in August while services were back to early 2007 levels? I wrote about it here on Sept 05:

The idiot/ eejit's guide to distorted Irish national economic data

The CSO said production for Manufacturing Industries for August 2014 was 2.3% lower than in July 2014. On an annual basis production for August 2014 increased by 21.2% when compared with August 2013. The seasonally adjusted volume of industrial production for Manufacturing Industries for the three months June 2014 to August 2014 was 12.4% lower than in the preceding three month period.

The “Modern” Sector, comprising a number of high-technology and chemical sectors, showed a monthly increase in production for August 2014 of 2.5%. There was a monthly decrease of 0.5% in the “Traditional” Sector.

There was an increase of 1.5% in the seasonally adjusted industrial turnover index for Manufacturing Industries in August 2014 when compared with July 2014. On an annual basis turnover increased by 17.8% when compared with August 2013.

Meanwhile, the seasonally adjusted monthly services value index decreased by 1.5% in August 2014 when compared with July 2014 while, in the year to August 2014, there was an increase of 5.1%.

On a monthly basis, Other Service Activities (+5.0%), Accommodation and Food Service Activities (+4.5%) and Transportation and Storage (+3.6%) increased when compared with July 2014. Professional, Scientific and Technical Activities (-5.1%), Information and Communication (-4.4%), Wholesale and Retail Trade (-2.0%) and Administrative and Support Service Activities (-0.3%) decreased in the month to August 2014.

On an annual basis, Information and Communication (+14.4%), Other Service Activities (+9.9%), Accommodation and Food Service Activities (+8.6%), Transportation and Storage (+7.0%) and Wholesale and Retail Trade (+0.5%) increased when compared with August 2013. Professional, Scientific and Technical Activities (-2.3%) and Administrative and Support Service Activities (-1.8%) showed a decrease in the same period.

David McNamara of Davy commented on the industrial production data: "Today’s dip is not entirely surprising given the recent volatility in the industry data (Figure 1). Following the massive 38% monthly rise in pharmaceuticals production in July, output slipped 0.6% in August and is now up 37.6% yoy. The big picture is that the manufacturing sector has bounced back strongly this year as the impact of the pharma patent cliff has waned.

Nevertheless, the broad sector breakdown still shows a 2.5% rise (+29.9% yoy) in the pharma-dominated modern sector output. This was driven by a 5.8% increase in other manufacturing, largely medical devices. Output in that sector is now 28% higher than 2013, benefitting from strong FDI flows over the course of the year.

In contrast, output fell 0.5% in the traditional sector, mirroring the slowdown in the UK (0.0%) and Germany (-4%) over the month. Nonetheless, while the labour-intensive traditional sector generally moves in line with the European cycle, the Irish sector has consistently outperformed this year with output up 5.5% on the year, helped by a 1.3% yoy rise in food and beverages production."