New export sales best since March 2010

Ireland’s manufacturing sector continued to strengthen during December, supported by accelerated rates of growth in new orders and output.

According to Investec’s monthly Purchasing Managers’ Index for December, demand rose both at home and abroad, with the increase in new export sales the best seen since March 2010, with companies reporting success in securing new business from Asia, the Middle East and the UK. This in turn saw employment grow at the fastest rate in 15 years.

The index stood at 56.9 in December, down marginally from 56.2 in November, but still signalling a marked strengthening of business conditions in the sector.

Supporting the PMI in December were concurrently stronger gains in output and new orders. Production growth was the best since August, while the rate of increase in new orders was the strongest for three months. There were reports from panellists of improved demand from both at home and abroad.

On the margin side, output prices posted their first (albeit marginal) increase in five months, while the rate of increase in input prices slowed sharply. Panellists reported that the falling oil price had helped to reduce the rate of increase in costs, however, they did also report some pressure resulting from the US dollar’s rise against the euro.

Philip O'Sullivan, chief economist with Investec Ireland, said that the data shows that the Irish manufacturing sector had a strong finish to 2014, with the headline index having posted 19 successive above-50 readings, with 2014 proving to be the first year since 2006 in which growth was recorded in every month.

“All in all, the strong finish to 2014 is particularly welcome given the recent rise in global concerns, with Russia, Greece, Ukraine and parts of the Middle East all providing reasons to be cautious in the run up to this release. We expect 2015 to be another year of progress for the manufacturing sector here, but with the international backdrop looking like it will get worse before it gets better, conditions may not prove to be as favourable as they were in 2014.”