Thursday 22 August 2019

Manufacturing industry expands for 29th month in a row

Philip O'Sullivan from Investec
Philip O'Sullivan from Investec

Michael Cogley

The manufacturing industry experienced growth for the 29th month in a row according to Investec's monthly Purchasing Managers' Index (PMI).

The index revealed a solid improvement in business conditions within the sector in Ireland for the month of October.

The rate of expansion in new orders rose to a three-month high as key sources of overseas demand being the UK and the US helping towards the substantial growth.

Firms in the sector have also been increase their staff levels as a response to higher output requirements and while there was an increase this month the employment index showed that October was the weakest increase since December 2013.

Chief economist at Investec Ireland, Phillip O'Sullivan, said that the rate of expansion in new orders was welcomed.

"There was a welcome quickening (to a three month high) in the rate of expansion in New Orders in October. A key factor behind this improvement was the ongoing substantial growth in New Export Orders, with a number of panellists reporting higher new business from clients in the US and UK.

"Notwithstanding the encouraging signs around client demand, Backlogs of Work decreased for a third successive month, albeit at a pace that was only slight.

"On the margin side, Output Prices declined for a fifth successive month, but the impact of this was at least partly offset by a reduction in Input Costs (the second fall in a row for this component) which is attributable to lower energy and raw materials (including metals) prices.

"With employment and purchases still on the rise, albeit at a slower pace than had been seen in recent months, it would seem that Irish manufacturing firms remain positive on the outlook, but perhaps not as much as they did earlier in the year when the prospects for the global economy seemed stronger. With that being said, supportive FX moves and a more robust growth profile for the country’s key trading partners should ensure that Ireland will be more insulated from the international headwinds than most," Mr O'Sullivan said.

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