Sunday 17 June 2018

Production sector sees sharp rise in output

Stock image: PA
Stock image: PA
Colm Kelpie

Colm Kelpie

Growth in the manufacturing sector here hit a two-year high last month, with sharp and accelerated expansions in both output and new work.

This fed through to increased jobs in the sector.

Manufacturing production increased at a substantial pace during the month, according to the latest Purchasing Managers Index for the sector.

Philip O'Sullivan, economist with specialist bank Investec, said Irish firms are right to be upbeat about the future.

"The data show that the rate of growth in new orders has quickened to the fastest since January," Mr O'Sullivan said.

"Panellists reported an uptick in growth in new export orders which they linked to the securing of new customers and success in international markets."

The seasonally adjusted Investec PMI rose to 56.1 in August, from 54.6 the previous month.

The pace of increase in new business also quickened, and was the sharpest since January.

Firms reported having been able to secure new customers, with some mentioning success in international markets. New export orders also rose. Increasing levels of new work resulted in a further build-up of outstanding business during August.

"The forward-looking future output index was little changed last month, with more than 90pc of panellists expecting to see flat or rising output over the next 12 months," Mr O'Sullivan said.

"Given the improving international economic backdrop … we think that Irish manufacturing firms are right to be upbeat about the outlook."

Meanwhile, Britain's factory activity grew more strongly than expected in August as work flowed in from home and abroad. The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) jumped to a four-month high of 56.9 from 55.3 in July.

Manufacturing accounts for only around 10pc of the British economy but the government there is hoping it will grow on the back of the fall in the value of sterling since last year's Brexit vote, which makes British exports cheaper.

Rob Dobson, a director at IHS Markit, said the strong performance last month, after a good July, should help support overall growth in the third quarter.

That could "add fuel to hawkish (Bank of England) policymakers' calls for higher interest rates", he said.

Sterling strengthened after the PMI survey was published.

Meanwhile, almost €20m in loans have been approved under an Irish microenterprise loan fund, according to the Microfinance Ireland report for three months to June. (Additional reporting Reuters)

Irish Independent

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