Manufacturing overheads rise at fastest rate in four years

Overhead costs for manufacturers rose at the fastest pace in over four years in January, as higher commodity prices, currency moves and price rises at UK suppliers hit the sector.

In a sign competitiveness is being hit, some firms hiked prices in response, according to the latest Investec Purchasing Managers Index for the sector in Ireland.

On a positive note, the increase in new orders seen during the month was the fastest since July 2015, with new business from abroad rising sharply.

Philip O’Sullivan, pictured, economist with specialist bank Investec, said rising costs dented profits.

“The rate of input cost inflation accelerated sharply during January to the fastest since October 2012,” Mr O’Sullivan said.

The seasonally adjusted PMI posted 55.5 in January, broadly unchanged from the reading of 55.7 in December and signalling a further health improvement in the sector. A reading above 50 signals expansion.

Meanwhile, in the UK sterling’s fall since Britain voted to leave the European Union stoked the sharpest rise in factory costs on record last month but little boost to exports.

The Markit/CIPS UK Manufacturing PMI showed growth there softened, but remains relatively robust.

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