Trading conditions in Ireland's manufacturing sector improved considerably in July, writes Siobhán Creaton, Finance Correspondent.
The seasonally adjusted Purchasing Managers' Index, which measures the economic health of that sector, rose to 55.2 in July, up from 53.7 in June.
NCB Stockbrokers, which compiles the index, said this increase confirmed that a significant upturn was under way in the economy.
"At 55.2, the index is at its highest level since May 2000. New orders have now been rising for 11 months," NCB's senior economist, Mr Eunan King, said.
The index of employment is at its best level since the beginning of 2001. Mr King said this suggested that the strong employment growth in the first quarter continued through mid-year.
The most recent improvement in economic conditions in the wholesale sector was again underpinned by buoyant growth of incoming new orders, up for the eleventh consecutive month in July.
The rate of growth of new business also picked up compared to the previous month, with firms reporting demand had strengthened in both domestic and international markets.
The expansion of new business prompted manufacturers to revise their production schedules upward and in July this happened at a faster rate than in June.
According to NCB, the July data indicated that manufacturers were operating closer to full capacity than in the previous month and that the rate of decline in backlogs moderated.
Some firms signalled shortages in some raw materials, mainly steel and steel-related goods. This contributed to slower lead-times and increased supplier pricing power, in turn having an inflationary impact on costs.
Furthermore, with high oil prices, the already sharp rate of input price inflation edged higher last month.
Manufacturers' demand for raw materials continued to build on the previous month, although current production requirements were also partly met from existing inventories of purchases.
During the month the rate of increase in employment was solid and picked up since the modest increase recorded in June, according to NCB.
