New manufacturing orders hit two-year high

Ireland’s manufacturing sector has reported the sharpest rise in new orders in over two years.

However, a slowdown in the growth of new export orders saw the headline purchasing managers index reading come back to 55.4 in September from 56.1 in August.

The euro’s strength against sterling was blamed by some respondents for cooling demand and resultant impact on demand from UK customers.

Despite the rise in new orders, companies eased their rate of new hiring. The employment figure in the index was the lowest in the past year.

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Investec, which produces the index, noted that business conditions in the manufactuing sector have now improved in each of the past 52 months.

PMI is an economic indicator that surveys purchasing mangers at businesses. A reading over 50 shows expansion in the sector.

The rate of input cost inflation in the sector accelerated to a three-month high in September, with wood and metals prices increasing.

With business sentiment at a four-month high and a number of firms predicting increases in new business from abroad, Investec analyst Philip O’Sullivan said the future outlook was positive “given the strengthening economic backdrop both at home and abroad”.

Ireland's strong performance in September came amid a raft of positive reports across Europe. Dutch, French and Greek manufacturing PMI figures neared record highs last month, while Spanish and German growth surged.

As Brexit concerns continue to weigh, the performance of the UK was below consensus. British manufacturing growth cooled as cost pressures inched higher in September. The UK PMI figure fell to 55.9 from 56.7 in August and, although that was higher than Ireland’s headline figure, it undershot the consensus of 56.4 in a Reuters poll of economists.

-(Additional reporting: Reuters)