Ireland: Manufacturing PMI inches up in May
June 1, 2018
The Investec manufacturing Purchasing Managers’ Index (PMI) inched up to 55.4 points in May from 55.3 points in April, reflecting improved business conditions in the manufacturing sector. The index moved further up from the 50-point threshold that separates expansion from contraction, where it has been sitting for close to five years.
May’s reading was underpinned by a sharp acceleration in new orders, which rose at the swiftest pace since January, thanks to higher demand from both domestic and overseas markets. The upturn in new business led manufacturers to lift production; output has now climbed for the past 22 months. Firms raised their staff intake for the twentieth consecutive month in response to the added accumulation in backlogs of work. Input costs continued rising in May, in part due to higher oil prices. Manufacturers responded to the upturn in input costs by increasing their output prices. The rate of inflation quickened to the sharpest rate since April 2017. Business confidence was more upbeat in May, with optimism on the 12-month outlook for production coming in the strongest since March 2015 on expectations of higher new orders, especially from overseas markets.
Commenting the outlook on production, Investec Chief Economist for Ireland Philip O’Sullivan stated:
“Notwithstanding this margin pressure, firms remain very upbeat on their prospects, with close to three-fifths of panellists (one of the highest shares in three years) expecting to see a rise in output over the coming 12 months. This confidence was linked to expectations of increases in New Orders, particularly from overseas. Given the supportive international backdrop, we think this optimism is warranted.”