Manufacturing growth at fastest rate in year

The manufacturing sector grew at its fastest pace in more than a year last month, boosted by buoyant export orders, new figures show.

The NCB Purchasing Managers' Index (PMI), designed to measure the health of the manufacturing sector, registered 54.3 in August, its highest reading since July 2006. Business conditions have now improved in each month of the past four years.

Dermot O'Brien, chief economist at NCB Stockbrokers, said the build up of finished products being reported by manufacturers was proof of the optimism in the sector.

"The latest survey shows continued and, indeed, strengthening growth in manufacturing activity, with output rising at its fastest pace in a year," he said, adding that it was the first time since October 2004 that such stock piles have built up in anticipation of future growth.

New business volumes increased at a robust pace, with firms attributing the growth to promotional campaigns and an improvement in underlying demand.

New order volumes have now risen in each month since September 2003, while new work from abroad rose for the third month in a row and at the sharpest rate since September 2003.

Yet, despite the recent growth, costs remain an issue for Irish manufacturers. Input price inflation remained strong in August, with 30 per cent of firms indicating that costs were higher than in July. Input costs have increased in each month since August 2003.

As a result, output charges also rose as companies sought to pass on the higher raw material and labour costs. In August the rate of output inflation accelerated to a five-month high, and was the third sharpest since charges data was first collected in September 2002. Charges have risen in each month since October 2003.