Ireland: Manufacturing PMI declines in October
November 1, 2017
The Investec manufacturing Purchasing Managers’ Index (PMI) dropped from 55.4 points in September to 54.4 points in October. Despite the drop, the indicator remains comfortably above the 50 threshold that separates expansion from contraction in the manufacturing sector, where it has been for almost four and a half years.
October’s print reflects slower growth in output and new orders. Growth in new orders remained strong, however, and was supported by higher overseas demand, particularly from the European Union. In turn, growth in output decelerated to its slowest print since March of this year. Despite higher new orders, backlogs of works were broadly unchanged in October as manufacturing firms increased staffing levels to keep up with additional work volumes. Regarding price developments, input costs rose sharply as prices for raw materials increased. Output prices rose in tandem as firms passed on higher input costs to consumers. The rate of increase in input and output prices, however, was slower than in September.
Assessing the latest one-year outlook reading among Irish manufacturers, Investec Chief Economist for Ireland Philip O’Sullivan commented that:
“Encouragingly, the forward-looking Future Output index shows that confidence among Irish manufacturers regarding the 12 month outlook of production picked up to an eight month high, with roughly 17 times as many panelists expecting to see a rise in output as opposed to the number anticipating a decline. Given the positive outlook for the Irish and wider global economies, we view this bullishness as well-founded”.