Irish manufacturing PMI (purchasing managers' index) in February was at its highest since 1999 but as we explained here, this is not a measure of activity as some journalists assume. It is a measure of sentiment and making historical comparisons are not reliable.
Not only were jobs in industry down by 66,000 between December 2014 and the same month in 1999, we showed on Friday that recent PMI survey data on claimed rises in employment are also unreliable — only 1000 jobs from 29,000 were added by industry in 2014.
In 2014 manufacturing data were also polluted by tax-avoidance related contract manufacturing.
Markit, the London-based index firm said today that growth in the Irish manufacturing sector gained momentum during February, with output and new orders each rising at faster rates than at the start of the year. Meanwhile, the pace of job creation quickened to the joint-sharpest in the survey history amid signs of increased capacity pressures in the sector. Both input costs and output prices continued to fall during the month.
The seasonally adjusted Investec PMI – an indicator designed to provide a single-figure measure of the health of the manufacturing industry – rose to 57.5 in February, from 55.1 in the previous month. This signalled the most marked strengthening of business conditions in the sector since December 1999. New orders at Irish manufacturing firms rose at a considerable pace during February, with the rate of expansion picking up to the fastest since August 2014. Anecdotal evidence pointed to success in securing new orders from both new and existing clients. The rate of growth in new export business also quickened during the month.
Rising new orders from both domestic and export clients led to another strong expansion in manufacturing production. Despite this, backlogs of work increased, with the rate of accumulation being the strongest since February 2011. Amid pressure on operating capacity manufacturers took on extra staff at a sharp pace.
Moreover Markit said the rate of job creation was the joint-fastest in the survey history, equal to that seen in the first month of data collection in May 1998 — as we noted above, in the year to December similar claims were debunked by CSO data.