Ireland: Manufacturing PMI rises to five-month high in June
July 2, 2018
The Investec manufacturing Purchasing Managers’ Index (PMI) enjoyed a strong finish to the second quarter, climbing to 56.6 in June from 55.4 in May. June’s print marked the highest reading since January and reflected a strong upturn in 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 close to for five years.
June’s print reflected sharper rises in output, new orders and employment. Notably, new orders grew at the strongest rate in the year-to-date, with a marked increase in new business from overseas markets, albeit slightly lower than that observed in May. Manufacturers lifted their production to fulfill the higher output requirements, with the rate of expansion picking up from the previous month, and also used inventories to meet the expansion in new orders. Firms raised their staff in-take to meet the higher backlogs of work, with the rate of job creation accelerating from May. On the price front, input prices rose at a sharp pace, mainly owing to higher costs for raw materials. Despite the discernible rise in input costs and while some firms did raise their output prices, overall there was a considerable slowdown in output price inflation in June amid increased competitive pressures. Business confidence remained upbeat in June, despite dipping from May’s 38-month high, thanks to expectations of continued growth in new orders.
Commenting the outlook on production, Investec Chief Economist for Ireland Philip O’Sullivan stated:
“[…] the forward-looking Future Output index remains very elevated, with around 55% of firms expecting to see a rise in production over the coming year, with this assessment based on the anticipation of stronger growth in export markets in particular. With global growth expected to remain close to 4% per annum into the medium term, we think this optimism is well founded.”