Saturday 22 July 2017

Manufacturing sector strengthens as exports drive economic growth

Peter Flanagan

Peter Flanagan

THE manufacturing sector strengthened again last month as exports continued to drive the economy, according to new data.

The NCB manufacturing purchasing managers index (PMI) for April grew slightly to 56.0 from 55.7 a month earlier.

The index is designed to measure the health of the manufacturing sector by a single number. A mark of more than 50 indicates growth, while less than 50 suggests activity is declining. The index is considered a key indicator of the health of the economy.

The reading signalled a strong improvement in operating conditions in the sector. Business conditions have now strengthened in each of the past seven months, NCB said.

Production increased for the 14th month in a row to 61.5, with exports continuing to drive the growth. The new export orders index rose to 60.7 on an unadjusted basis.

According to the survey's respondents, the UK was a key source of growth. New orders from abroad rose for the seventh successive month with "close to one-third" of respondents signalling an increase in new export business, while only 12pc showed a decrease.

New orders rose for a seventh straight month, while the employment index continued to show "solid" job creation numbers, with the seasonally adjusted figure of 54.0 only slightly weaker than March.



Production

Higher input costs were passed on by manufacturers for the fourth month in a row. The rate of charge inflation was "substantial".

NCB said the need to raise production was the key reason for taking on more staff.

The stockbroker's chief economist Brian Devine said: "The manufacturing sector is largely driven by exports and the euro's continued rise against sterling and dollar will be of concern, but, to date, demand is outweighing this impact with new export orders reading at 59.0."

The strong data from the PMI here contrasted sharply with the UK, where activity fell to its lowest level in seven months amid declining consumer confidence and falling construction orders.

The gauge fell to 54.6 from a revised 56.7 in March, missing market expectations.

The lower number fuelled speculation that the recovery in manufacturing may be losing momentum as the biggest fiscal squeeze since World War Two takes hold, countering the benefit to exporters from a weaker pound.

"Export orders continue to grow at a very healthy rate, but domestic demand is suffering as a result of falling consumer confidence and spending," said David Noble of the Chartered Institute of Purchasing and Supply, which conducted the survey.

"The outlook for UK manufacturing is bleaker than it was at the start of the year."

It is believed the weak PMI will pile pressure on the Bank of England to not raise interest rates this week, keeping them at a historic low of 0.5pc.

Irish Independent

Promoted articles

Also in Business