Ireland: Manufacturing PMI climbs in April, recovering from the previous month's weather-related slowdown
May 1, 2018
The Investec manufacturing Purchasing Managers’ Index (PMI) climbed to 55.3 points in April, recovering from March’s weather-related slowdown that hurled the PMI to a one-year low of 54.1 points. The index moved further up from the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been sitting for close to five years, and signals improved business conditions.
April’s reading indicated a marked pick-up in the growth of manufacturing output following weather-related disruptions to production lines in March. New orders also climbed in April but at a slower rate compared to the previous month. The rate of expansion in new orders weakened for the fourth consecutive month, to the slowest since November 2016. Moreover, new business from overseas also grew at the softest pace in a year-and-a-half. With production lines back in swing and firms continuing to use inventories to help meet rising orders, backlogs of work accumulated more slowly in April . While manufacturers continued taking on more staff to support the expansion in output, marking 19 consecutive months of employment growth, the rate of job creation lost pace from December’s record high. Input prices climbed again in April, underpinned by shortages of raw materials and growing demand. Firms raised output prices in response and passed the burden of cost-adjustment onto consumers. On the downside, business confidence in the sector eased from March.
Commenting the outlook on production, Investec Chief Economist for Ireland Philip O’Sullivan stated:
“The forward-looking Future Output index cooled to its lowest for five months, although it remains well into positive territory, with around 95% of panellists saying that they anticipate output to be either the same or higher 12 months hence. With global growth at a seven-year high, we think that this optimism is well-placed.”