Ireland: Manufacturing PMI declines marginally in July
August 1, 2018
The Investec manufacturing Purchasing Managers’ Index (PMI) came in at 56.3 in July. Although marginally down from 56.6 in June, the latest reading reflected continued strengthening in business conditions. Thus, the index remained above the critical 50-point threshold that separates expansion from contraction in manufacturing activity, where it has been for close to five years.
Stronger client demand drove sharp upturns in output and new orders.. Robust demand in overseas markets fueled a rise in new export orders, although the pace of expansion slowed to a three-month low. Despite an improved operating capacity, backlogs of work continued to climb owing to robust growth in new orders, as well as supply shortages and transportation disruptions. Looking at prices, higher prices for raw materials including fuel, oil and plastics, drove an upturn in input costs. Firms responded to the increase in input prices by raising their output prices. Manufacturers remained optimistic that output would surpass current levels in 12 months’ time on expectations of an expansion in new orders and launch of new products.
Commenting the outlook on production, Investec Chief Economist for Ireland Philip O’Sullivan stated:
“While the forward-looking Future Output index moderated to an eight-month low, it remains well above the 50 mark, signifying strong optimism by panelists […] While the international backdrop has become slightly more uncertain in recent times, we think the upbeat stance by manufacturers on the outlook remains warranted.”