Further growth in the Irish manufacturing sector was recorded at the start of 2015 as client demand continued to improve. Both output and new orders rose sharply, albeit at slower rates than in December. Falling oil prices led to a solid reduction in input costs, with firms passing these declines on to customers by way of lower output prices.
However, this survey as with the CSO's industrial production data maybe impacted by a jump in tax avoidance- related bookings of foreign manufacturing in Ireland by pharmaceutical firms taht was evident in 2014
The seasonally adjusted Investec purchasing managers’ index (PMI) – an indicator designed to provide a single-figure measure of the health of the manufacturing industry – posted 55.1 in January, signalling a marked improvement in business conditions at the start of the year. That said, the reading was down from 56.9 in December, and the lowest since May 2014.
Manufacturing production rose for the twentieth month in a row during January. Although slowing from the previous month, the rate of expansion remained sharp. Panellists reported that higher new orders and work on new products had helped lead to an increase in output.
Overall new business continued to increase at a sharp pace amid reports of rising client demand. A further rise in new export orders was registered, with panellists indicating that the UK had been a particular source of new business.
Markit said that backlogs of work were broadly unchanged in January, following a solid decline in the previous month. Meanwhile, employment rose for the twentieth consecutive month as firms took on extra staff in response to higher new orders and expectations of further growth in coming months. Although remaining solid, the rate of job creation was the slowest since July 2014.
The recent fall in the price of oil fed through to the Irish manufacturing sector in January, with lower fuel costs mentioned by a number of respondents. Input prices decreased at a solid pace, ending a two-month sequence of inflation. The drop in input costs led to a reduction in output prices, which fell for the fifth time in the past six months.
Suppliers’ delivery times lengthened again in January amid reports from panellists of strong demand for inputs and weather-related delays.
Input buying at manufacturing firms has increased throughout the past year, and the latest rise was marked despite being the weakest in eight months. Where input buying increased, this was mainly in response to higher new orders.
Despite ongoing growth of purchasing activity, pre-production inventories decreased for the first time since August. Stocks of finished goods also fell in January, the second successive month in which that has been the case.