Growth in the manufacturing part of the economy continued last month, but progress was at its weakest level for a year and a half, latest monthly data from specialist financial services group Investec shows.
Investec’s latest manufacturing purchasing managers’ index has shown a reading of 53.6 for August, down from 56.7 in July but still well up on the neutral 50 point mark, which separates a sector in growth mode from a contracting one.
That means that Ireland’s manufacturing sector has technically been in growth mode for the last 27 months.
However, August saw a slowing in new order growth (although the increase was still high enough, with new export orders the driving force) and a slowdown in hiring activity.
Respondent companies pointed to a “softening” in the rate of growth in new orders from home and abroad. August’s growth was the slowest since February of last year.
However, Investec’s chief economist Philip O’Sullivan said there is no real cause for too much alarm at this point.
“While this is, clearly, a more downbeat manufacturing PMI release compared to what we have grown accustomed to over the past 18 months or so, we are not overly concerned at this point,” said Mr O’Sullivan.
“On balance, the sector still has significant tailwinds behind it and we still expect to see a strong finish to the year.
“We expect that the more troubled international backdrop and the slight euro softening seen last month were key factors [in the slowdown of new business in the period concerned].
“While Irish-based manufacturing companies continue to add to headcounts, as they have done for each of the past 27 months, the pace at which they are doing so slowed to a level not seen since July of last year.
“Increased staffing resources and weaker demand growth produced a modest rate of depletion in backlogs of work.”
While the rate of expansion slowed slightly from the preceding month, new export orders saw a substantial monthly increase in August. All three monitored market groups posted higher new export orders last month led by intermediate goods producers.
© Irish Examiner Ltd. All rights reserved