03 Apr 2018

Investec Manufacturing PMI Ireland March 2018

The latest Investec Manufacturing PMI Ireland report shows the effect that Storm Emma had on the sector in March, with clear evidence of disruption to sector output and distribution.

While the headline PMI still points to growth, at 54.1 in March (versus 56.2 in February) it has moderated to a 12 month low.

 

The Output index was only marginally in positive territory last month, falling to its lowest since August 2016. The timing of this was particularly unhelpful, given that it coincided with yet another sharp rise in New Orders (extending the sequence of growth here to 20 months). Panellists benefited from rising demand from both domestic and overseas markets (the eurozone was mentioned as a source of strength in the latter).

 

The mismatch between output growth and demand saw the rate of increase in Backlogs of Work quicken to its highest since December 2016. This was in spite of the utilisation of inventories by companies in an effort to fill customer orders, with Stocks of Finished Goods depleting at its fastest rate in just over six years – and this pace would have been quicker were it not for the consistent build in stocks in the four preceding months.

 

Notwithstanding the weather-related disruptions to production, Irish manufacturers continued to add to headcounts during the month.

 

On the margin side, Input Prices recorded another sharp increase in March, led by rising raw materials costs, notably for steel. Companies were able to pass at least some of this pressure on by hiking Output Prices once again, but it wasn’t enough to prevent a second successive sub-50 reading for the Profitability Index, indicating a deterioration in this metric.

 

The Future Output Index of expectations was little changed last month, with c. 11 times as many manufacturers anticipating growth over the coming 12 months versus those who foresee a decline. Given the generally supportive international backdrop we view this optimism as well-founded. All in all, we wouldn’t read too much into this month’s data given the weather distortions and would expect a marked improvement when the April Manufacturing PMI report is released.


 

To view this full report please click here.