New production orders in sharp expansion, but export orders fall
New production orders have posted their sharpest expansion in 26 months, according to the latest Investec Manufacturing PMI Ireland report.
However there was slower growth in new export orders in September, which some firms attributed to the euro’s strength against sterling and resultant impact on demand from UK customers.
This slow down in the growth of new export orders may be a cause for concern among exporters, particularly those exporting to the UK.
The latest Manufacturing PMI report reveals that business conditions in the sector continued to improve markedly at the end of the three months to 30 September.
The headline PMI recorded its 52nd successive above-50 reading in September, coming in at 55.4, well above the mark of 50 which is deemed growth, and little changed from the previous month’s 56.1 out turn.
Irish manufacturing firms eased the pace of hiring activity last month, with the employment component moderating to its weakest in the current 12 month sequence of expansion.
Backlogs of work also moderated last month, falling to just above the 50 'no-change' line. This is likely explained by a third successive monthly depletion in stocks of finished goods.
On the margin side, output prices increased for a 16th successive month, but this was largely reflective of the pass-through of higher input prices. On the latter, the rate of cost inflation quickened in September, particularly for raw materials such as wood and metals.
The profitability component remained in positive territory in September, although the rate of expansion has cooled to the slowest rate since the three months to May.
The forward-looking future output index improved to the highest in four months in September, with seven times as many respondents predicting a rise in output over the next 12 months against those who are pessimistic.
"Given the strengthening economic backdrop both at home and abroad, we concur with those who are positive on the outlook," Philip O'Sullivan, Investec Ireland's chief economist, said.