Manufacturing growth speeds up again in May – PMI
The country’s manufacturing sector expanded at its quickest pace in three months in May to mark two years of non-stop growth as firms increased prices slightly to offset cost pressures.
The Investec Manufacturing Purchasing Managers’ Index rose to 57.1 in May from 55.8 in April, just under the 15-year high of 57.5 hit in February.
The index has held above the 50 line denoting growth since May 2013, when the country was in an international bailout programme.
The PMI sub-index measuring output prices among manufacturers was above the breakeven line for the second month in a row for the first time in almost a year, with a reading of 50.9 in May, down slightly from 51.8 in April.
Manufacturers’ costs have risen sharply in the past three months.
“The strength of sterling and the US dollar were once again identified by respondents as the principal factor that is pushing up on costs,” said Investec Ireland’s chief economist Philip O’Sullivan.
“Despite the cost pressures, the rate of growth in the Quantity of Purchases index quickened to the fastest since February 2011, which gives a further indication of the favourable demand conditions in the sector at this time,” he added.
Mr O’Sullivan also noted that the then upcoming UK General Election had been seen as a key risk factor for the manufacturing sector here.
He said that the surprise overall majority achieved by the Conservatives removed that risk, with the renewed strength in the pound relative to the euro since the election providing a renewed tailwind for the 15% of Irish merchandise exports that go to the UK.
“This should lead to further positive Investec Manufacturing PMI readings for Ireland in the coming months, assuming that developments in Greece don’t take a turn for the worse,” he added.
