Monday 23 April 2018

'Solid growth' as Eurozone factory boom slows again

IHS Markit chief business economist Chris Williamson said that while March saw the biggest fall in the manufacturing PMI since June 2011, and the third successive slowing in the pace of expansion,
IHS Markit chief business economist Chris Williamson said that while March saw the biggest fall in the manufacturing PMI since June 2011, and the third successive slowing in the pace of expansion, "we should not be worried" by the declines (stock picture)
John Mulligan

John Mulligan

The Eurozone manufacturing boom has continued to slow from December's record high, but remains in "solid growth mode" across the region.

Fresh data confirmed the slowdown, with the growth rate during March the slowest in eight months, according to IHS Markit.

The pace of growth was hit as the fear of a global trade war permeated businesses.

Ireland's manufacturing performance last month was hit by the impact of Storm Emma.

The weakest manufacturing growth last month across the Eurozone was recorded in Ireland and France.

But the latest Eurozone figures showed that the manufacturing purchasing managers' index (PMI) stood at 56.6 in March, still significantly ahead of a reading below 50 that would indicate contraction.

"The further easing in the headline PMI mainly reflected slower growth of manufacturing production and incoming new business, both of which rose to the lowest extents since November 2016," noted IHS Markit.

"Growth in new export business, which is not a component of the headline PMI, slipped to a 15-month low."

IHS Markit chief business economist Chris Williamson said that while March saw the biggest fall in the manufacturing PMI since June 2011, and the third successive slowing in the pace of expansion, "we should not be worried" by the declines.

"Some moderation in the pace of growth from the surge seen at the turn of the year was inevitable, not least because short-term capacity constraints limit the economy's ability to grow so quickly for long periods," he said.

"This has been clearly evident in the recent lengthening of supply delivery times. Some of the slowdown has also been attributable to temporary factors such as bad weather," he added.

But Mr Williamson conceded that with business optimism across the region having fallen to a 15-month low, there's a suggestion that there are other factors now hitting factory order books.

"Export growth has more than halved since late last year, linked in part to the appreciation of the euro, and in some cases demand is being stymied by higher prices," he said.

Mr Williamson added: "The overall pace of growth nevertheless remains robust by historical standards."

Irish Independent

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