Tuesday 19 June 2018

Manufacturing sector records record growth in December

Irish manufacturing growth in December hit its highest level in almost 20 years
Irish manufacturing growth in December hit its highest level in almost 20 years
Ellie Donnelly

Ellie Donnelly

In December Irish manufacturing growth hit its highest level in almost 20 years.

The performance was driven by a growth in new orders, with December's level of production the strongest in the current 17 month sequence of growth, and third-fastest in the Investec Manufacturing PMI Ireland surveys history.

Demand from North American customers was particularly strong during December, the report found.

Overall the headline PMI improved to 59.1 in December from November’s reading of 58.1.

On the back of the stronger customer demand, the employment growth also surged to a record high, while the quality of purchases accelerated to the joint-fastest since February 2011.

Despite these additional resources and a slight uptick in stocks of finished goods, manufacturers’ backlogs of work increased for an eighth successive month in December.

Turning to margins, the report from Investec found that input costs rose at their fastest pace in nine months, with higher raw material costs widely mentioned by panellists.

Firms were able to defray at least some of the increased cost pressures by hiking output prices, however, this was not enough to prevent a moderation in the rate of growth implied by the profitability index.

Looking forwards, the future output index strengthened in December, with more than six times as many companies expecting to see growth in 2018 as opposed to those who anticipate a decline.

"Given the strong conditions evident in the manufacturing sector, it is no surprise to see that firms are upbeat about the outlook," Philip O'Sullivan, economist with Investec, said.

"With global growth expected to improve to a seven year high in 2018, we think that firms are right to be confident about their prospects for this year," Mr O’Sullivan said.

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