Manufacturing slips from winning run
Confident of exiting its EU/IMF bailout on schedule at the end of 2013, Ireland has seen its economy expand for the last two years, but it contracted in the third quarter of 2012 and was flat in the fourth as weak external demand weighed on exports.
The NCB Manufacturing Purchasing Managers’ Index fell to 48.6 in March from 51.5 in February, below the 50 line that divides growth from contraction for the first time since Feb 2012.
Factories in Germany and Ireland, the relative stars of February’s PMIs, fell back into decline last month. Everywhere else, the industrial rot extended.
“This is a disappointing release, with declines observed on the output, new orders, and employment fronts,” said Philip O’Sullivan, chief economist at NCB Stockbrokers.
“We will closely watch April’s release to see if any of these trends have persisted into Q2, paying particular attention to see if the elevated macroeconomic uncertainty of recent days and weeks weigh on survey findings.”
Manufacturing contributes around one quarter of Ireland’s gross domestic product. The contraction in manufacturing tallied for the first time in more than a year with activity for the eurozone as a whole, as reflected in flash PMI data released in mid-March.
Irish manufacturing has consistently outperformed the eurozone average over the past 12 months, and reached a 15-month high of 53.9 in July last year.
The fall in new export orders to 47.1 from 50.1 in February, together with falls in other sub-indices, showed the Government may face a challenge this year in reaching the 1.5% economic growth it has pencilled in.
A Reuters poll of economists last week predicted that the economy likely grew by 0.3% in the first quarter and would expand by 1.3% for the year as a whole.
Manufacturing across Europe’s major economies endured another month of mostly deep decline in March, dragging down even former bright spots.
The slump among British manufacturers eased slightly, but overall purchasing managers indexes made for gloomy reading.
Spanish manufacturing fell at its fastest pace since October, which followed news that the government will revise its economic forecasts for 2013 to show a 1% contraction, from a 0.5% decline previously forecast.
In France, factory activity fell for a 13th month and car registrations there dived 16.4% in March, further underlining the malaise sweeping through the eurozone’s second-biggest economy.
— Reuters
