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The recovery in the Irish
manufacturing sector continued in December, with both output and new orders
rising at solid rates and employment increasing, according to a report published on Monday. The improvements were recorded
despite disruption caused by poor weather conditions.
The seasonally adjusted NCB
Purchasing Managers’ Index (PMI) - - an indicator designed to
provide a single figure measure of the health of the manufacturing industry –
rose for the third month running to 52.2 in December, from 51.2 in the previous
month, to register a modest strengthening of operating conditions in the sector.
Moreover, the improvement was the most marked since May.
Solid output growth was recorded in
December, in line with rising new business from both domestic and overseas
markets. Production has now increased in each of the past ten months, with the
latest rise the steepest since June.
Overall new order growth expanded in
December, while new export business continued to increase at a solid pace. Those
panellists reporting higher new orders from abroad highlighted Asia, the Middle
East and the UK as sources of growth. Despite higher new business levels,
work-in-hand fell further. However, the reduction in backlogs in December was
the slowest since July.
Irish manufacturers raised
employment for the first time in seven months, but at only a marginal pace.
The rise in staffing levels mainly reflected increased workloads.
Input price inflation remained
elevated in December, despite easing slightly over the month. Raw material
prices were the main source of input cost inflation, with higher oil-related
prices also mentioned. In contrast to the rise in input costs, Irish
manufacturers lowered output prices over the month as firms offered discounts in
an attempt to stimulate new business. The fall in charges was the third in the
past four months.
The survey showed that poor weather conditions were the key
factor behind December’s deterioration in vendor performance. Lead times
lengthened markedly, albeit at the slowest pace in nine months.
Purchasing activity rose for the
tenth consecutive month in December, and at a solid pace that was the steepest
since April. According to respondents, the rise was mainly due to increased new
Despite higher purchasing, stocks of
inputs decreased as inputs were utilised in the production process. However, the
fall was the weakest in thirty-one months. Stocks of finished goods also
decreased, with the marked reduction largely due to stocks being used to help
meet increased sales.
The NCB Republic of Ireland
Manufacturing PMI (Purchasing Managers’ Index) is produced by Markit Economics.
The report features original survey data collected from a representative panel
of around 300 companies based in the Republic of Ireland manufacturing sector.
Europe manufacturing has shown fast improvement, but growing Asian countries will not be able to absorb the continent's goods, Roger Nightingale, a strategist at Pointon York told CNBC: