Manufacturing sector maintains rapid growth in July but cost pressure remain
The manufacturing sector continued to grow at a rapid pace in July, albeit at a slower rate than the previous two months.
According to AIB’s latest monthly check on conditions in the manufacturing sector, new order growth hit another record high for the third month running.
Output, while up, was partly constrained by ongoing supply shortages.
That had an impact on cost pressures, which were described as remaining ‘severe’.
Output price inflation rose at a record pace, the report said.
AIB’s Purchasing Managers Index (PMI) is a single-figure composite indicator of performance in the manufacturing sector.
Any figure above 50 signals expansion in the sector while anything below that threshold points to contraction.
The figure for July registered at 63.3, down from 64 in June and 64.1 in May – an all-time high in the measure.
Inflation pressures remain
The level of new orders continued to boom in July, with the rate of expansion setting a new survey record for the third month in a row.
Raw material shortages and insufficient shipping capacity continued to drive up input prices.
The rate of inflation eased from June’s near-record pace, but was still the third-highest in the survey history, with manufacturers continuing to pass on higher prices to customers.
“Amid the rapid pace of growth in manufacturing activity, capacity constraints remained very much in evidence. This was reflected in a new record rate of increase in backlogs of work, with supply shortages contributing to the difficulties that firms are facing,” Oliver Mangan, chief economist with AIB said.
“The Irish data remain broadly in line with strong PMIs from the some of the key advanced economies. UK, eurozone and US flash readings of 60.4, 62.6 and 63.1, respectively provide further evidence of the upward momentum being maintained in the sector,” he added.