“..sharp decline, driven primarily by the Construction PMI reading”| Constantin Gurdgiev

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14 April 2015

Purchasing Managers Index (PMI) is an indicator of the economic health of a sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment (read more here).

Further softening in construction sector activity has been flagged by Constantin Gurdgiev, in his blog “True Economics”. He has posted a composite PMI snapshot based on 3 core sectors: Manufacturing, Construction and Services. For full post click here:

True Economics: 8/4/15: Irish Quarterly PMIs: Services, Manufacturing & Construction

For the construction sector he says:

Construction PMI (based on 2 months of data for 2015) is currently standing at 54.6, down from 63.8 in Q4 2014. This is a marked reversal in the q/q growth rates from 3.2% in Q4 2014 to -14.5% in Q1 2015, though we need to see March data to make any conclusions on this.

Yearly growth rates are falling off the cliff too: in Q3 2014 Construction PMI rose 21.3% y/y, which declined to 8.5% growth in Q4 2014 and to estimated -5.3% contraction in Q1 2015. Again, as with Manufacturing, we do have continued 7 quarters of above 50 readings in the series, so the slowdown is in the rate of growth, not an outright contraction in activity.”[emphasis by BReg Blog]

Quarterly PMI's

“As the chart above shows, Composite Index (computed by myself based on sectoral weights in the National Accounts) has posted a relatively sharp decline, driven primarily by the Construction PMI reading. As of today (absent March data for Construction PMI) the composite indicator is reading at 59.0, down from 60.7 in Q4 2014.

This is the lowest reading in four quarters, so y/y the index is still up 1.4%, although the rate of growth in the index has fallen from 4.2% recorded in a year through Q4 2014 and 6.7% growth posted in Q3 2014. Nonetheless, the index continues to trend above 50 for the 17th quarter in a row.”

Other posts of interest:

Irish Planning Permissions 2014: The Crisis Drags On | Constantin Gurdgiev

Building & Construction Activity in Ireland: 2014 | Constantin Gurdgiev

Cabinet’s ‘spin’ and the real Housing problem | Irish Independent

Irish construction sector slowing rapidly | Davy Research

Minister Kelly approves 200 staff: will any go to building control?

Gurdgiev | PMI “a bit bubbly, a bit bonkers…”

Gurdgiev: Irish Residential Property Prices: Q3 2014

Ronan Lyons | Regulations pushing up the costs of homes

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