Manufacturing hits two-year high after five months of growth
MANUFACTURING has hit a two-and-a-half-year high, with growth recorded for five successive months, a survey has shown.
The rate of growth in new business quickened in October, according to the latest Purchasing Managers' Index (PMI) from specialist bank Investec.
Investec economist Philip O'Sullivan said the rate of expansion in employment grew to its highest since June of last year.
"The sector has experienced five successive months of growth," he said. "New orders expanded for the fourth month running, helped by improving economic conditions domestically and higher new export orders.
"Respondents cited the US and Europe as sources of higher demand during the month.
"Given this backdrop, it is unsurprising to see that firms have stepped-up their purchasing activity, with the quantity of purchases component rising to its highest level since July of last year."
The PMI rate increased to 54.9 in October – that was up from 52.7 in September.
Anything above 50 indicates expansion, while a figure below that signals contraction.
The study is based on data compiled from monthly replies to questionnaires sent to executives in some 285 industrial companies across the country.
Survey responses reflect the change, if any, in the current month compared to the previous month. Key highlights include:
* New orders increased for the fourth consecutive month in October, and the rate of expansion picked up to the fastest in 15 months. About 35pc of respondents signalled a rise in new business, which they linked to improving economic conditions in Ireland and growth of new export orders.
* Increased work volumes encouraged manufacturers to take on extra staff. Around 24pc of panellists reported a rise in employment, against 7pc who posted a fall.
* Purchasing activity rose markedly during October, with the rate of expansion much sharper than in September.
* After rising marginally in the previous month, backlogs of work decreased slightly in October.
* Input prices continued to increase in October, extending the current sequence of inflation to three months.
"Last month, we said that 'with the outlook for export demand underpinned by improving economic indicators across many of Ireland's key trading partners and a more stable domestic backdrop, we are confident that the recent momentum will be sustained into 2014'," Mr O'Sullivan said.
"Today's release leads us to reaffirm that view."