Activity in Ireland’s manufacturing sector recorded its 14th consecutive month of growth in July, as output hit a three month high and the UK was cited as a key source of new business.
Investec’s monthly Purchasing Managers’ Index (PMI), an indicator designed to provide a single-figure measure of the health of the manufacturing industry, posted 55.4 in July, little changed from 55.3 in June. This is the 14th successive monthly improvement in operating conditions in the sector, and the rate of expansion was sharp, quickening to the fastest since April.
The rate of growth in Irish manufacturing output quickened to a three-month high in July, with panellists mainly linking higher production to increased new business. Output has risen continuously on a monthly basis since June 2013.
Philip O'Sullivan, chief economist with Investec Ireland, said that the survey showed that client demand continued to improve both at home and abroad.
“The new orders and new export orders indices have posted above-50 readings for 13 successive months now. Panellists identified the UK as a particular source of higher overseas demand, with sterling strength likely to be a contributory factor here.”
While manufacturing firms increased their employment “at a solid pace” in July, the rate of job creation eased to the slowest in six months. According to Investec, anecdotal evidence suggested that the latest increase in employment was linked to higher new business and positive expectations regarding client demand.
In line with higher demand, manufacturing firms stepped up their purchasing activity in July. The quantity of purchases rose for a sixth successive month, but this was not enough to keep up with demand, with the stocks of purchases declining marginally for the second time in the past three months.
New business continued to rise in July amid reports from panellists of higher new orders from both domestic and export clients. With regards to exports, July data pointed to a thirteenth consecutive monthly increase in new export orders at Irish manufacturing firms. The rate of expansion remained sharp but was slower than recorded in June. A number of respondents highlighted the UK as a key source of new business.
