Rising levels of new orders and companies’ efforts to build their stocks saw manufacturing production increase for the 17th successive month in October.
In the sharpest increase since May, Irish manufacturing firms again took on additional staff last month.
Commenting on Investec’s latest manufacturing Purchasing Managers’ Index (PMI), Investec Ireland chief economist Philip O’Sullivan said that the quantity of purchases index showed that three times more manufacturing firms stepped up their input buying than reported a reduction last month.
“In terms of export demand, panellists cited the UK as a key source of new business, with the relative strength of sterling helping to improve Irish firms’ competitiveness. On the margin side, output prices declined for a third successive month in October, with this linked to the drop in input prices seen over the same period. In addition to the deliverate build-up of pre-production inventories, manufacturing firms’ optimism can be seen in the employment index which shows staffing levels have risen in each of the past 17 months, with the latest increase the sharpest since May.”
According to the survey, extra staff had been taken on in line with greater production requirements. The investment goods sector posted the fastest increase in employment. The seasonally adjusted PMI rose to 56.6 in October, from 55.7.
New export orders again increased with the UK identified as a key source of new business, although the rate of expansion eased.
Irish manufacturers saw a series-record increase in stocks of purchases during October, surpassing the record seen in December 1999. More than 22% of respondents raised pre-production inventories, linked to higher demand. Input costs fell, largely attributed to lower prices in commodity markets. Input prices fell to at consumer and intermediate goods firms but increased in the investment goods sector.
Despite the continued strengthening of the sector, Mr O’Sullivan warned that a dip in the headline PMI rate could be seen in the coming months as global conditions remain challenging. However, he said Q4 had “gotten off to a good start for the manufacturing sector”.
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