The Irish manufacturing sector expanded at the fastest rate since 1999 in August, as a surge in new orders offered further evidence that the economy is recovering steadily.
The Investec Manufacturing Purchasing Managers' Index rose to 57.3 in August from 55.4 in July, well above the 50 line dividing expansion from contraction. This is the fastest rate of expansion in activity since December 1999.
The country has seen a string of positive data in recent months and analysts forecast that the economy will grow 3 per cent this year after two years of near stagnation.
“This is a strong outcome, particularly when framed against the backdrop of weakening signs from some euro zone trading partners of late,” Investec Ireland chief economist Philip O’Sullivan said.
“With manufacturing firms in Ireland stepping up their purchasing and hiring activity, it is clear that they are optimistic of a strong finish to the year,” he added.
One of the key highlights of the Manufacturing PMI for some time has been the Employment index, which now shows that the Irish manufacturing sector has increased headcounts in each of the past 15 months.
New export orders rose for the fourteenth month running in August, with the rate of growth picking up from the previous month.
On the pricing side, Mr O’Sullivan said the news was more mixed, with a marginal decline recorded in output prices while input prices also fell for the first time in 13 months.
Highlighting the weakness of the fall in output prices, more than 92 per cent of panellists reported no change in output prices from July.
After having risen in each of the previous 12 months, input costs in the Irish manufacturing sector decreased modestly in August. Lower costs for paper and pulp were mentioned by respondents, while weakening price pressures in dairy markets were also cited.
The PMI sub-index measuring new orders among Irish manufacturing firms rose 60.4 in August from 57.1 in July. Output prices, work backlogs and input prices all slipped.
Manufacturing accounts for about a quarter of Irish gross domestic product, according to World Bank figures.
Additional reporting: Reuters
