Output and demand
Underpinning the latest improvement in operating conditions was a further increase in the volume of new orders placed with Irish manufacturers. Moreover, the already solid rate of growth in new business accelerated slightly from one month earlier. Panellists reported that increased demand included greater spending amongst existing clients together with new work from fresh sources. Survey data showed that new export orders had risen for a third successive month – and at the sharpest pace since August 2004.

The continued upturn in new business prompted Irish manufacturers to further increase production at their units in January. In addition, the rate of output growth was slightly sharper than that recorded in the previous month. Despite their need to satisfy a greater volume of new orders, manufacturers were able to effect a further modest reduction in backlogs of work outstanding.

Input and output prices
Irish manufacturers pointed to a further strong increase in average input costs in January, which they linked to the rising price of a range of raw materials (steel and plastic products in particular). However, the rate of input price inflation eased for the third month in a row, and considerably from December. Output prices continued to increase, but at a weaker rate than average input costs. A number of firms reported that strong competition had limited the extent to which they could raise selling prices.

Purchasing
A rise in purchasing activity was recorded in January for the sixteenth month running, and at a similar solid rate as December. Survey firms commented that input buying was increased to meet growing production requirements. However, the rise in purchasing was insufficient to prevent a reduction in stocks of purchases, which fell modestly. Stocks of finished goods declined at a similar rate.

Employment
Levels of employment at Irish manufacturing firms rose again in January. Furthermore, the rate of job creation was the sharpest for six months. Panel firms reported that the recruitment of additional workers reflected not only the need to deal with further expansion of new orders, but also expectations of growth in demand through 2005.