CONDITIONS IN the Irish manufacturing sector improved in October following the sharpest rise in production for three months. The seasonally adjusted NCB Stockbrokers Purchasing Managers’ Index (PMI) moved back above the no-change mark of 50 in October to 50.9, from 48.4 a month earlier.

“Business conditions have now strengthened in seven of the past eight months,” NCB said.

The index suggested new business increased in October, following a decline in September, largely because of higher levels of new orders from export markets. This increased from 49.5 to 54.9.

These orders led to an eighth successive increase in Irish manufacturing output, which, albeit marginal – 50.4 to 51.1 – was the fastest for three months. This element of the index corresponds more closely to manufacturing’s contribution to total gross domestic product growth.

The survey said spare capacity remains as the amount of outstanding work fell again, as did employment, though at a far slower pace. “Hiring in response to increased new orders was cancelled out by attempts to reduce costs,” NCB said.

Input costs surged in October to their strongest level for five months, from 58.4 to 63.7, with the survey suggesting higher raw material costs as the driving force.

Despite the increase in input prices, output charges fell slightly, for the second month running, as intense competition prohibited price rises. Stocks of finished goods were also found to be depleted, extending a sequence of decline to 2½ years, but at a slower pace. NCB said this trend reflected higher sales.

In Britain, the PMI rose from September’s 10-month low of 53.5 to 54.9 – its highest level since July. Output rose for the first time since March, from 54.5 to 56.4.

“Manufacturing remained a driver of UK economic growth at the start of the final quarter,” said Rob Dobson, economist at Markit.

Manufacturing in the US expanded more than forecast as production and orders placed with factories rose to five-month highs.