Wednesday 21 February 2018

Manufactures grew last month -- but export picture darkened

Peter Flanagan

Peter Flanagan

IRELAND was one of the few countries to register manufacturing growth last month, as production shrank in both Europe and Asia.

Here the NCB purchasing managers index (PMI) showed expansion for the fifth month in a row, growing to 51.8 in September from 50.9 in August.

Similar measures elsewhere, however, continued to contract, albeit at a slower pace than previously.

The PMI measures manufacturing growth in a single number. A figure over 50 means production is expanding; under 50 means it is shrinking. The index is seen as a key indicator of the health of any economy, and is one of the most closely watched economic data points.

Growth here was driven by an increase in new orders, which have now expanded every month since February. That drove output, which has now grown every month since April.


Employment levels surged to the highest level since May, while backlogs of inventory and orders continued to decline, suggesting firms were battling to supply the market, rather than just selling off existing stock.

The report was not all rosy, however. New orders for export -- a key measure given Ireland's reliance on sales overseas -- contracted for the first time in six months.

"This is likely to be driven to some extent by the well-documented challenges facing many of Ireland's key trading partners," said NCB's chief economist Philip O'Sullivan.

Those surveyed reported "weak client demand in export markets. Sector data indicated that the overall reduction in new business from abroad was centred on consumer goods' producers as the intermediate and investment goods sectors recorded rises", NCB said.

Mr O'Sullivan said the index showed a "modest improvement in operating conditions".

"Although the rate of expansion remained only slight, it was quicker than in August."

In contrast to Ireland, manufacturing elsewhere contracted, but markets were encouraged that the rate of decline was beginning to slow.

The eurozone PMI rose one point to 46.1 in September, but remained deep in contraction for the 14th month.

Irish Independent

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