Storm Emma hits manufacturing as output slows to 12 month low in March
Manufacturing output slowed to a 12 month low in March, as Storm Emma caused disruption to sector output and distribution.
The headline Purchasing Managers Index (PMI) stood at 54.1 last month, down from February’s 56.2 reading, according to specialist bank Investec's Manufacturing PMI index.
Any reading over 50 is deemed growth.
Despite the moderation in growth, the sector has now posted 58 successive readings above the 50 mark.
The Output index was only marginally in positive territory last month, falling to its lowest since August 2016, with anecdotal evidence overwhelmingly linking the slowdown in output growth to snow disruption from Storm Emma.
"The timing of this was particularly unhelpful, given that it coincided with yet another sharp rise in New Orders, extending the sequence of growth here to 20 months," Philip O'Sullivan, economist with Investec, said.
During the month panellists benefited from rising demand from both domestic and overseas markets, with particularly strong demand coming from the Eurozone, the Index found.
The mismatch between output growth and demand saw the rate of increase in Backlogs of Work quicken to its highest since December 2016.
This mismatch occurred despite the utilisation of inventories by companies in an effort to fill customer orders, with Stocks of Finished Goods depleting at its fastest rate in just over six years – and this pace would have been quicker were it not for the consistent build in stocks in the four preceding months, Investec said.
However, while the weather may have caused disruption to output, Irish manufacturers continued to raise their staffing levels during the month, roughly twice as many panellists increased employment as those who reduced workforce numbers, with respondents linking hiring to rising new orders.
On the margin side, Input Prices recorded another sharp increase in March, led by rising raw materials costs, notably for steel.
Companies were able to pass at least some of this pressure on by hiking Output Prices once again, but it wasn’t enough to prevent a second successive sub-50 reading for the Profitability Index, indicating a deterioration in this metric, the report found.
Looking forwards and the Future Output Index of expectations was little changed last month, with around 11 times as many manufacturers anticipating growth over the coming 12 months versus those who foresee a decline.
"Given the generally supportive international backdrop we view this optimism as well-founded," Mr O’Sullivan said,
"All in all, we wouldn’t read too much into this month’s data given the weather distortions and would expect a marked improvement when the April Manufacturing PMI report is released."