Irish manufacturing activity grew for a 12th successive move in May, albeit at a weaker rate, possibly reflecting a European-wide slowdown in recovery, a survey showed today.
However, the latest Investec Purchasing Managers' Index (PMI) also indicated companies in the sector hired staff at the fastest rate in nearly 15 years, primarily as a result of increasing workloads linked to new export orders.
The finding was at odds with the latest Quarterly National Household Survey, which suggested employment growth in the Irish economy had slowed significantly.
Investec’s headline PMI index - essentially a single-figure measure of the health of the sector - fell to 55 in May, down from 56.1 the previous month but still comfortably above the 50 mark, which denotes an expansion in activity.
Operating conditions for the manufacturing sector have now strengthened throughout the past year.
Investec’s sub-index for output increased for a 12th consecutive month in May, though the rate of expansion eased to the weakest level since February. Anecdotal evidence suggested that higher sales was the principal factor leading to production growth, the survey said.
New orders at manufacturing firms also rose in May, extending the current sequence to 11 months, though again at a slower rate than the preceding two months. More than 30 per cent of firms registered an increase in new orders, with some reporting that the launch of new products had helped to stimulate demand.
The sub-index for new export orders accelerated to the fastest rate since last October, with respondents identifying the UK was the main source of new business from abroad.
Increased workloads was the main factor behind another rise in employment in the sector in May, according to firms. Staffing levels have now increased throughout the past year, and the rate of job creation accelerated in the latest survey period to the strongest level since December 1999.
Meanwhile, output prices continued to fall amid strong competitive pressures, albeit the rate of decline eased from that seen in the previous month.
Taken together with recent positive Services PMI and Construction PMI readings, today’s Manufacturing PMI report provides a further reminder of the strong momentum across much of the private sector in Ireland,” Investec Ireland chief economist Philip O’Sullivan said.
A series of manufacturing PMI surveys for the rest of the euro zone, published on Monday, also indicated a slowdown in growth, cranking up pressure on the European Central Bank (ECB) to stimulate the European economy when it meets on Thursday. In contrast to Europe, US and China manufacturing surveys indicated an acceleration of activity in May.