The Ireland manufacturing sector held its ground during November as output and new orders rose slightly over the month. Total new business was boosted by a marked rise in new export orders, but spare capacity remained evident as both backlogs of work and employment continued to fall.
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 slightly to 51.2 in November, from 50.9 in the previous month. This indicated that operating conditions in the sector improved for the second month running, albeit at only a marginal pace.
Production growth was extended into a ninth successive month in November. Although the rate of expansion was fractionally quicker than in October, it was still weak. Higher new business was the main driver of rising output.
New business rose marginally over the month. Total new orders were boosted by new export business, which expanded markedly as global demand strengthened and Irish manufacturers introduced new products. New export orders have now risen in twelve of the past 13 months.
Despite increased new business, spare capacity persisted in the sector. Backlogs of work fell markedly, and at the fastest pace in nine months, while job cuts have now been recorded in all but one month of the past three years. Alongside insufficient workloads, panelists also mentioned that employment had decreased in an attempt to reduce costs.
Input cost inflation accelerated for the third successive month as a range of raw materials increased in price. The latest rise in input prices was the fastest since May. Some firms raised output prices in response, although competitive pressures prevented a number of panelists from increasing charges, resulting in only fractional inflation overall.
Suppliers’ delivery times lengthened sharply, and at the steepest pace in three months, largely reflecting insufficient stocks of raw materials at suppliers.
Irish manufacturers increased input buying in November, in line with rising production as well as to avoid potential cost increases. However, growth eased over the month and was only marginal.
Stocks of purchases at Irish manufacturers fell in November, as has been the case throughout the past three years. The pace of depletion remained solid. Post-production inventories also decreased over the month, mainly as a result of increased sales. However, the rate of decline was much weaker than in the previous month, and was the slowest in 2.5 years.
Commenting on the NCB Republic of Ireland Manufacturing PMI survey data, Brian Devine, economist at NCB Stockbrokers, said: “Fiscal and banking issues rightly continue to be the focus in Ireland, but the underlying economy, especially those areas directly involved in exporting are still alive and kicking. The output component of the PMI rose to 51.5 in November after 51.1 in October. New orders also increased for the second month running, driven by the expansion of the export sector in particular.”
