Manufacturing sector experiences first improvement in four months

The manufacturing sector saw its first improvement for four months during June, according to new findings.

The latest monthly purchasing managers’ index, from Investec Ireland, shows a marginal increase in its reading — from 49.7 points to 50.3 points (anything above the neutral 50 point-mark signifies a sector in growth mode) — and the first upturn among manufacturing companies since February.

The 50+ reading was largely anticipated, but wider positivity among respondent companies has led commentators to suggest the sector’s growth might be sustainable.

“In all, while the headline expansion is only marginal, we suspect that this may prove to be the start of an improving trend for the Irish manufacturing sector, buoyed by stronger overseas demand,” according to Investec Ireland’s chief economist Philip O’Sullivan.

June’s index shows a fractional decline in new order levels and a slight quickening in the rate of decline in new export orders. However, some respondent firms also indicated improving demand levels and nearly 20% of companies said they had increased their staffing levels during the month. This was done in an effort to increase capacity and support new product introduction.

“Given the improving growth prospects for many of Ireland’s key trading partners, we expect this improvement to be sustained over the rest of 2013 and beyond,” noted Mr O’Sullivan.

June also saw the first fall in input prices for 11 months, with lower steel and plastic prices cited as factors behind this movement. However, this tailwind to margins was somewhat offset by yet another decline in output prices, which have now fallen in three of the past four months, he also noted.

While still in negative territory, overall new manufacturing order levels declined at their slowest rate since February.


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