Manufacturing activity expanded in October, according to the NCB Purchasing Managers' Index, a composite indicator designed to provide an overall view of activity in the sector. Overall, the survey noted record increases in output and employment, although the cost of raw materials also increased faster than before.
The survey of 268 industrial companies - the first published indicator of business conditions each month - rated overall manufacturing activity at 58.7 on the index. The figure, up from 57.3 in September, was the highest since the survey began 18 months ago and the fourth consecutive monthly acceleration in the rate of growth.
The survey provides a qualitative rather than quantitative assessment of manufacturing conditions. While a reading above 50 shows activity is generally expanding, a reading below 50 indicates that manufacturing is generally declining.
Employment in the manufacturing sector also rose in October, with the index reaching 57.7 last month, up from 55.8 in September, also the largest rise since the survey began. "Over a quarter of panel members reported they had taken on new workers during the month, principally in order to expand capacity in line with fuller order books," the survey said.
Manufacturing output was rated at 60.6, up from 60.2, also a record increase. "The manufacturing sector is in a very buoyant shape right now," said NCB's chief economist, Mr Dermot O'Brien. "The economy is in very strong shape."
The growth is attributed to rising demand for Irish goods with new orders increasing sharply during the month, at the highest rate since June 1998. "Both domestic and overseas demand was reported to have remained buoyant, although a slight moderation in the rate of export orders was recorded," the survey said.
It noted, however, that manufacturers' raw materials' costs rose in October for the fourth successive month, the fastest rate yet recorded by the survey.
Asked if this would be reflected in monthly consumer price index inflation figures, Mr O'Brien said the impact would be "relatively small". "It's not a huge concern. These are input prices with little impact on final goods prices. The key thing in this is energy prices, but oil prices are now off their peak."
The survey noted, however, a growing number of firms were purchasing additional inputs to avoid impending price increases. This, and higher production requirements, led to a record rise in the quantity of inputs purchased by managers. The rate of stocks of purchases increased accordingly.
Mr O'Brien said export orders were still growing, but at a marginally lower rate. This was the seventh consecutive monthly rise following a contraction of export orders at the beginning of the year.
The survey, produced by NCB in association with the Irish Institute of Purchasing and Materials Management, noted that the seasonally adjusted suppliers' delivery time index had fallen to 43.2, its lowest level since the survey began.
