Ireland: Manufacturing PMI eases to 27-month low in May
June 1, 2016
The Investec Manufacturing Purchasing Managers’ Index (PMI) dropped from 52.6 in April to 51.5 in May. Despite the drop, the PMI remains above the 50-threshold that indicates expansion in the manufacturing sector, where it has been for 36 consecutive months. Although May’s result signaled further strengthening in the manufacturing sector, the reading marked the softest expansion since February 2014.
May’s reading reflected softer expansions in output and new business while new export orders declined for the first time after 34 consecutive expansions. Output decelerated on the back of slower growth of new orders while new business expanded at the slowest pace since November 2013. Lack of new orders contributed to a reduction in outstanding business and backlogs of work. Regarding price developments, input prices rose for the first time in eight months on the back of higher commodity prices. Despite higher input costs, output prices dropped as sluggish client demand and increased competition kept output prices in check.
According to the survey report, “in last month’s Manufacturing PMI report we cautioned that ‘Q2 is likely to prove to be a tricky period for many Irish manufacturing firms ahead of the June 23 EU referendum in the UK (the destination for roughly one-seventh of Irish merchandise exports)’. We expect that at least some of the weakness outlined above relates to that event and other international uncertainties.”