New orders and employment in the manufacturing sector here rose at their fastest pace in 20 years as 2017 drew to a close.
Higher new orders against the backdrop of a booming economy at home, and strong demand from abroad, helped drive a sharp rise in the number of jobs being created. But even that wasn’t enough to stop backlogs of work, according to the Purchasing Managers’ Index for December.
The pace of growth in the sector as the year ended was the strongest since the survey began in 1998. It was a similar picture more widely for manufacturers across the eurozone.
“It has been impressive for the last couple of years, but in the second half of last year it really gathered steam. Now we have the best reading ever for the two decades that we have been compiling this,” Philip O’Sullivan, chief economist with specialist bank Investec, which publishes the data, told the Irish Independent.
“The manufacturing sector exited 2017 with a very strong tailwind behind it which is encouraging for the economy here.”
Companies are also confident that demand will continue into this year – despite the spectre of Brexit.
The seasonally-adjusted PMI rose to 59.1 in December from 58.1 in November. Anything above 50 signals expansion.
New orders increased at a “substantial” pace last month, with the rate of growth accelerating to the fastest since June 1998.
Those companies which responded to the survey mainly linked the rise to improving client demand. Meanwhile, new export orders also increased sharply, albeit at a reduced pace.
The US was said to be a particular bright spot in terms of overseas demand, but other countries in Europe, including the UK, and Asia have also been mentioned by firms.
“It’s really just positive demand across [the board],” Mr O’Sullivan added. “That’s not particularly surprising given that the world economy is in pretty good shape. We should see global growth best for seven years in 2018, but that’s only slightly better than the growth rate we would have seen in 2017. And Ireland is extremely leveraged to what happens internationally.”
Mr O’Sullivan said the typical companies responding to the PMI survey include food manufacturers, paper, chemical, as well as electrical and engineering. He said there was no one area driving the performance.
“It is reasonable to assume that the breadth of the improvement is very wide,” he said.
It was similarly positive for manufacturers across the eurozone. December’s PMI for the bloc, produced by financial information firm Markit, was 60.6, above November’s 60.1. That was the highest since the survey began in June 1997. Meanwhile in the UK, manufacturing growth eased, dropping to 56.3 from 58.2 in November.