Companies boosted by new orders last month, index shows

IRELAND’S MANUFACTURING production expanded in October despite the challenging global backdrop, according to the latest NCB purchasing managers’ index (PMI).

However, a separate survey from KBC Bank set a more downbeat tone, suggesting Irish firms have yet to see a broad-based turnaround in the business environment.

In October the headline manufacturing PMI reading stood at 50.1, just above the 50 mark that separates growth from contraction. This indicates that the sector expanded slightly, and marks an improvement on September when the reading was 47.3.

“It is surprising that the index expanded given the global backdrop and the fact that export orders actually declined,” said NCB Stockbrokers chief economist Brian Devine. “Ireland is not going to be able to buck the trend should advanced economies slow but the fact that the US is looking stronger than the euro area should be a relative benefit for Ireland.”

The rise in manufacturing production last month was mainly due to an increase in new orders – the first such increase in five months – with some respondents reporting signs of improving market conditions.

However, in spite of increased workloads, manufacturers continued to reduce their staffing levels last month. Employment in the sector has now fallen in five of the last six months.

Despite a marked increase in input prices in October, output prices fell for the third consecutive month. The slight drop in output charges was attributed to a combination of strong competition and attempts to boost demand.

The latest KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey found that business activity weakened slightly in the third quarter.

Chartered Accountants Ireland president John Hannaway said this result was not entirely surprising. “Unfortunately, the type and scale of problems the Irish economy faces mean we can’t expect a sharp or straight-line turnaround,” he said.

The autumn survey also found that access to credit remains a problem, with more than half of all companies surveyed indicating that credit constraints were an issue for their business.