Monday 23 July 2018

Manufacturing growth hits highest level in 18 years

Stock image: PA
Stock image: PA
Ellie Donnelly

Ellie Donnelly

Irish manufacturing growth in November hit its highest level in 18 years.

The growth was driven by stronger client demand from both the domestic market and overseas customers, according to the latest Purchasing Managers Index (PMI) for the sector.

The latest rise in new orders was one of the strongest in the survey’s history, while growth in new export orders firmed to the sharpest in almost three years.

The headline PMI reading was 58.1, up from October’s 54.4, and its highest level since December 1999, as Irish manufacturers continue to defy Brexit concerns about the economy.

"Business confidence [has] remained elevated, with expectations of new order growth and improving economic conditions in export markets supporting optimism that output will increase over the coming year," Philip O'Sullivan, economist with Investec, said.

The increase in growth has resulted in a further rise in the backlogs of work, with November’s increase the fastest in the current seven month sequence of growth.

Looking at margins, the rate of input cost inflation quickened to a seven month high, with this latest rise attributed to increased raw material costs, including for aluminium, paper and plastics.

Manufacturing firms were able to cover at least a portion of these cost pressures by upping output prices, as they have for 18 successive months.

Meanwhile, helped by higher volumes, the profitability index improved to the sharpest level since the three months to April 2015.

"Irish manufacturing businesses remain very upbeat about the prospects for the sector. The IMF’s latest projections show global economic growth accelerating to a seven year high of 3.7pc in 2018, so given the extent to which the Irish economy is leveraged to international developments we believe that manufacturers here are right to feel confident about the future," Mr O’Sullivan said.

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