Thursday 22 March 2018

Manufacturing industry slows as new order growth hits 29-month low

Philip O'Sullivan is Chief Economist with Investec Ireland
Philip O'Sullivan is Chief Economist with Investec Ireland
Michael Cogley

Michael Cogley

The Irish manufacturing industry slowed in April with the headline reading from the Investec Purchasing Managers Index (PMI) dropping to its lowest since November 2013.

The headline figure from the PMI for April was 52.6, down from 54.9 in March.

Investec chief economist Philip O'Sullivan said the steep slowdown in the rate of new orders is of particular concern.

"This sluggishness appears to be most acute in the export sector, as new export orders expanded only slightly in the month amid ‘a general weakening in demand in international markets."

Growth in new orders slowed to a 29-month low in April which allowed businesses to reduce their backlogs of work.

In the latest reading from Investec manufacturing firms completed their fourth successive month of depletion in backlogs of work.

"On the margin side, input costs fell for the eighth month in a row, led by weaker raw material costs, although it is worth noting here that some panellists reported signs of inflationary pressures returning.

"At least some of the benefit from the weaker input costs was passed on to end-customers, as output prices fell for a fourth successive month," Mr O'Sullivan said.

In terms of employment  the rate of expansion has slowed to its weakest in 2016 with the continuing increase in hiring activity suggesting Irish firms don't expect the dropoff in new orders to last.

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