Ireland’s manufacturing sector expanded at its fastest pace in 15 years last month, far outstripping the major European economies.
Output and new orders rose at faster rates than at the start of the year, when it seemed like the pace of growth was beginning to ease, according to the latest Purchasing Managers’ Index (PMI) for the sector.
Philip O’Sullivan, economist with specialist bank Investec, said February’s data was especially impressive given international concerns, including Greece and the Ukraine.
“Last month we said that the sector remains in growth mode,” Mr O’Sullivan said.
“This report gives an indication of how resilient this growth is, but we would caution that any uncertainty ahead of the upcoming UK election – given that Ireland’s closest neighbour has repeatedly been identified by manufacturers as a key source of demand – is likely to put that to the test.”
By contrast, Eurozone activity grew just slightly last month as companies kept slashing prices, but a weakened euro did little to help drive new orders from abroad.
Data from Germany, Europe’s biggest economy, showed manufacturing growth was slower than previously thought. In France, the bloc’s second biggest economy, activity shrank for the ninth month.
Here at home, the seasonally adjusted PMI index rose to 57.5 in February, from 55.1 the previous month. This signalled the most marked strengthening of business conditions in the sector since December 1999.
Anything above 50 signals expansion, while below that marks contraction. PMIs are closely watched by economists and analysts and are regarded as reliable forward-looking indicators of the health of an economy.
New orders at manufacturing firms here rose at a considerable pace last month, with the rate picking up to its fastest since August last year. The rate of growth in new export orders also quickened.
This helped boost employment, with the pace of job creation quickening to a near record.
“A particular highlight of the release is the employment index, which reveals that the rate of job creation has accelerated to the joint-fastest in the history of the survey, equal only with the first month of data collection in May 1998,” Mr O’Sullivan added.
“Respondents attributed the latest rise in staffing levels to efforts to increase capacity.”
But despite the buoyant demand conditions, manufacturing firms lowered output prices for a second successive month, with competitive pressures and a weaker euro being blamed.
Elsewhere, the final January manufacturing PMI for the Eurozone was 51, in line with forecasts. Although it was a six-month high, it was only just above the 50 mark.
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