New order growth quickens to four-month high in Ireland
Staff Writer |
Business conditions continued to improve markedly in the Irish manufacturing sector during May.
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The rate of new order growth accelerated sharply, helping to support further increases in output and employment.
Meanwhile, business confidence hit a 38-month high.
Inflationary pressures remained elevated, with output prices rising to the greatest extent in 13 months.
The seasonally adjusted Investec Purchasing Managers’ Index (PMI) – an indicator designed to provide a single-figure measure of the health of the manufacturing industry – ticked up to 55.4 in May from 55.3 in April.
The latest reading signalled a further marked monthly improvement in the health of the sector.
Business conditions have now strengthened on a monthly basis throughout the past five years.
A key positive from the latest survey was a marked acceleration in the rate of growth in new business.
New orders rose at the fastest pace since January, with some panellists mentioning strength in export markets.
In line with this, the rate of expansion in new business from abroad also accelerated.
Higher new orders led manufacturers to increase production during May.
The rate of expansion was marked, but eased slightly from that seen in April.
Output has now risen in each of the past 22 months.
Another accumulation of backlogs of work was also linked by panellists to higher new orders.
That said, the pace at which outstanding business increased was only slight due to increased staffing levels.
Employment rose for the twentieth consecutive month in May, albeit to the weakest extent since September last year.
Manufacturers noted a rise in input costs again in May, with the rate of inflation remaining sharp.
Panellists often mentioned higher oil prices, with plastics and metals also reportedly costing more.
Firms responded to higher input costs by raising their output prices during the month.
Moreover, the rate of inflation quickened to the sharpest since April 2017.
Purchasing activity increased at the fastest pace in 2018 so far.
Further strong growth of input buying continued to impart pressure on supply chains as evidenced by another substantial lengthening of delivery times.
Despite delays in receiving items, stocks of purchases rose for the third month running in May.
In contrast to the picture for pre-production inventories, stocks of finished goods decreased, the third month running in which this has been the case.
Panellists reported that the shipping of finished products to clients had been behind the latest decline in inventories.
Business confidence improved in May, with optimism regarding the 12-month outlook for production the strongest since March 2015.
Around 58% of respondents predict a rise in output over the coming year.
Confidence was linked to expectations of increases in new orders, often from export markets. ■
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