Factory Output Bounced Back In June

30 Jun 2020 | 10.34 am

Factory Output Bounced Back In June

Manufacturing PMI for June 2020

30 Jun 2020 | 10.34 am

Manufacturers continued to shed staff in June despite a notable uptick in output and new orders that brought the Manufacturing PMI back into growth territory following the decline during Covid-19 lockdown.

AIB chief economist Oliver Mangan commented: “A record 11.8 point jump in the Manufacturing PMI for June to 51,  from 39.2 in May, is a clear indication of improving economic conditions as lockdown restrictions are gradually eased. The headline index has also moved back into positive growth territory — above 50 — for the first time since February. 

“Two key components of the survey, new orders and output, registered very large increases. New orders rebounded from 28.9 in May to 51.8, while output leapt from 28.7 to 50.4. Indeed new export orders rose at their fastest rate since April 2019 as economies reopened in Europe and the US.  Meanwhile, the 12-month outlook continued to recover from its April lows, with a record 10.2 point rise in June to 63.3, though this is still below its long run average.”

However, higher production was not matched by a rise in employment, with many plants operating well below full capacity. Manufacturers cut numbers for the fifth successive month, though at the slowest rate in four months. One-in-five firms cut staff during June, down from 29% in May and 41% in April. 

Inflationary pressures continued to weaken. Input prices and prices charged for finished goods both fell for the fourth successive month, but slightly slower than in in May. 

Mangan (pictured) added: “Manufacturing conditions have not returned to normal. The collapse in orders in the March-May period means that backlogs continued to fall sharply, while inventories of finished goods shrunk further, with stocks of inputs also still in marked decline.”

The Future Output Index remains below its eight-year long-run average, reflecting uncertainty around the length and severity of recessions triggered by the pandemic. 

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