Expansion in manufacturing sector moderates

The Irish manufacturing sector continued to expand and increase employment levels, although the pace of expansion moderated to its lowest level in five months.

The seasonally adjusted Investec Purchasing Managers’ Index — an indicator designed to provide a single-figure measure of the health of the manufacturing industry — showed a solid strengthening of operating conditions in January, Investec said. However, falling to 52.8 from 53.5 in December, the rate of improvement weakened slightly from the end of 2013.

“The latest Investec Manufacturing PMI report shows that activity in the Irish manufacturing sector continued to grow in January, albeit at a slightly slower rate (52.8) than in December (53.5). The marginal slowdown in growth is primarily attributable to a moderation in output growth, which expanded at the slowest rate since August,” said Investec chief economist, Philip O’Sullivan.

“Although production growth slowed in January, new orders remained relatively robust, with improved demand reported from both domestic and export customers. In relation to the latter, growth in new export orders quickened to the fastest rate in three months during January.

The outlook was also positive across the rest of the eurozone. Euro-area factory output expanded faster than initially estimated in January, led by Germany and France, as the currency bloc’s economic recovery gained traction.

An index based on a survey of purchasing managers in the manufacturing industry increased to 54 from 52.7 in December, London-based Markit Economics said. That exceeds Markit’s initial estimate of 53.9 on January 23. A reading above 50 indicates expansion.

The eurozone performance was driven by Germany. The Markit index for the bloc’s largest economy beat the flash estimate and increased to 56.5, a 32-month high.

Additional reporting Bloomberg