Manufacturing industry hits six-month high in January – Investec

The Irish manufacturing industry hit a six-month high in January as an increase in new orders and a quickening of the rate of expansion helped it to a positive start to 2016.

According to Investec’s monthly Purchasing Managers’ Index (PMI), more staff continued to be taken on in the first month of 2016, while the overall headline reading figure rose to 54.3, up from 54.2 in December.

Speaking about today’s release, chief economist at Investec, Kevin O’Sullivan, said that the industry had a strong start to the year.

“A key highlight of today’s report is the new orders component, which reveals a sharp and accelerated expansion, extending the current run of positive readings to 31 months. We are also encouraged to see that the rate of growth in new export order improved to a six month high, notwithstanding some of the unhelpful moves we’ve seen in the currency markets in recent weeks.

“Last month’s report revealed that growth in payrolls had slowed to its weakest pace since August 2013. Today’s report shows a welcome, if modest, uptick in the rate of job creation. Helped by these additional resources, Backlogs of Work recorded a depletion for the fifth time in the past six months,” Mr O’Sullivan said.

Input costs received a further reduction thanks to falling commodity prices with PMI panelists noting drops in the prices of oil and metals.

Some of these gains however were offset by a drop in output prices, the first in three months.

Speaking about the changes in margins Mr O’Sullivan said: “Turning to margins, input prices fell sharply in January, extending the run of declines to five months. This latest fall was attributed to lower oil and metals prices.

“At least some of these gains were, however, offset by a drop in output Prices, the first in three months, which we suspect may be linked to the currency moves alluded to above,” he said.

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