Ireland: Adverse weather causes Manufacturing PMI to drop in March
The Investec manufacturing Purchasing Managers’ Index (PMI) declined from February’s 56.2 points to a one-year low of 54.1 points in March. Despite the drop, the indicator remains comfortably above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for over four and a half years.
March’s print reflected a sharp slowdown in output growth due to production disruptions caused by winter storm Emma. Inclement weather caused manufacturing output to grow at the slowest pace since August 2016. Growth in new orders also slowed but remained robust nonetheless. Higher new orders were buttressed by an increase in new export orders and new business. Increased client demand and limited production capacity caused backlogs of work to accumulate at the sharpest pace since December 2016. This forced manufacturers to use existing inventories to meet demand, and post-production inventories dropped at the sharpest pace in over six years. Regarding price developments, an increase in the prices for raw materials pushed input costs higher and resulted in a rise in output prices.
Commenting on March’s figure, Investec Chief Economist for Ireland Philip O’Sullivan stated, “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.”