Manufacturing output up but rate of growth slows in February
Signs of restraint on manufacturing capacity while employment keeps growing in sector
Factory production: new orders saw a moderation in growth in line with the main index, but orders from overseas customers picked up growth.
Output in the Irish manufacturing sector continued to rise sharply in February, but the pace of growth was slower than in recent months, new data showed.
The Investec Manufacturing PMI Ireland report recorded a headline figure of 56.2 last month, down from January’s 57.6 reading.
The latest survey brings to 57 the number of successive readings above 50, the point that marks expansion from contraction.
Overall, new orders saw a moderation in growth in line with the main index, but orders from overseas customers picked up growth. New export orders hit a three-month high on higher demand from Europe, Asia and Africa.
However, there were signs of capacity constraint among manufacturers, with the index that measures backlogs of work above 50 for the 10th month in a row. Employment continued to grow in the sector too.
“Suppliers’ delivery times lengthened at a substantial pace last month, with the rate at which vendor performance deteriorated the second-strongest since the survey began in May 1998, second only to the dubious record seen in August 2010,” said Investec’s Philip O’Sullivan.
Input prices were up, with raw materials such as electronic items, paper and steel rising in price. Although some of this was passed on to customers, it wasn’t enough to stop the profitability index falling below 50 for the first time in 10 months.
“Our narrative for some time has been that the quickening in global growth [Ireland is one of the world’s most open economies] will underpin continued expansion for the manufacturing sector here. In that regard, we are unsurprised by the headline progress advertised by this latest PMI release, although the capacity issues will require careful monitoring at least in the coming months,” said Mr O’Sullivan.