Sunday 18 August 2019

Growth in manufacturing sector eases for third month

Dublin Port
Dublin Port
Philip O'Sullivan is Chief Economist with Investec Ireland

Colm Kelpie

The rate of expansion in Ireland's manufacturing industry eased for the third straight month in October.

But business from abroad helped cushion the slowdown, rising at a substantial pace, particularly from the US and UK.

And manufacturing in the Eurozone as a whole remained weak last month, but in the UK, growth at British factories surged unexpectedly to a 16-month high.

In Ireland, the rate of expansion eased to its slowest since February of last year.

Philip O'Sullivan, economist with specialist bank Investec, said there was a welcome quickening in the rate of expansion in new orders in October.

"A key factor behind this improvement was the ongoing substantial growth in new export orders, with a number of panellists reporting higher new business from clients in the US and UK," Mr O'Sullivan said.

"Notwithstanding the encouraging signs around client demand, backlogs of work decreased for a third successive month, albeit at a pace that was only slight." Mr O'Sullivan said one explanation for this is that growing staffing resources enabled some firms to get to grips with rising client orders.

"With that being said, there are no indications from this report that the overall manufacturing sector has an embarrassment of riches where manpower is concerned, with Stocks of Finished goods recording their first depletion in five months as inventories were used to help fill some client orders," he said.

The seasonally adjusted PMI posted 53.6 in October, down fractionally from 53.8 in September and signalling a solid improvement in the health of the manufacturing sector. A number above 50 indicates growth. Business conditions have now strengthened in each of the past 29 months.

A slower increase in output contrasted with a sharp and accelerated expansion in new orders, as some panellists reported having secured new clients.

New export orders also rose at a substantial pace amid reports of higher new business from clients in the UK and US.

Elsewhere, the European Central Bank's massive stimulus programme has done little to spur manufacturing growth in the Eurozone, a separate survey showed, as factories again resorted to slashing prices to drum up trade.

But in the UK, growth at factories surged unexpectedly to a 16-month high helped by a recovery in export orders.

Irish Independent

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