Ireland: Manufacturing PMI climbs to seven-month high in August
September 3, 2018
The Investec manufacturing Purchasing Managers’ Index (PMI) climbed to a seven-month high of 57.5 points in August, up from 56.3 points in July. The index remains above the critical 50-point threshold that separates expansion from contraction in manufacturing activity, where it has been for over five years. August’s print reflects a notable strengthening in business conditions and the swiftest rise since January of this year.
Strong increases in output and new orders, driven by higher demand from domestic and overseas markets, fueled the upturn in August. New business from abroad rose at the quickest rate in three months. The sharp rise in new orders spurred a marked accumulation in backlogs of work. Firms hired more workers in response, with the rate of job creation remaining solid and largely unchanged since July. On the price front, prices for raw materials and supply shortages led to an upturn in input prices. Improved client demand and higher input costs prompted firms to raise their output prices. Firms remained upbeat about output climbing in 12 months’ time, with business confidence rising in August.
Commenting the outlook on production, Investec Chief Economist for Ireland Philip O’Sullivan stated:
“The forward-looking Future Output index remains very elevated and reached a three-month high in August. 56% of respondents expect a rise in production over the coming 12 months, while just 4% anticipate a decline. With a positive economic backdrop both in Ireland and abroad, we think this optimism is well-founded.”