Further job cuts in manufacturing

DESPITE increasing order books for a fifth month in a row, Irish manufacturers cut jobs for the second month in a row, the NCB Purchasing Manager’s Index shows.

The January PMI shows a slight fall to 52.2 from the December level of 52.6. The PMI broke above the 50 expansion/contraction threshold between August and October of last year. Since then the index has been holding at a level where it indicates there has been no acceleration in the rate of growth.

Meanwhile, European manufacturing expanded at the fastest pace in three years in January as economic growth in the US and Asia drives export demand, outweighing the euro's climb against the dollar.

An index based on a survey of 2,000 purchasing managers compiled for Reuters Group Plc by NTC Research Ltd. rose to 52.5 from December's 52.4.

NCB Stockbrokers senior economist, Eunan King said: "The overall index suggests that the economy maintained broadly the same pace of growth indicated since October. Output and orders, including export orders, continued to grow. Indeed growth in orders from the US and Asia suggest the strength of the euro is not an absolute impediment." The output segment of the index-surveyed companies linked higher output to fuller new order books. In a commentary on Ireland by NTC research, the authors said that production and new orders both showed growth compared to one month earlier, though at a less rapid pace, and a lengthening of average lead times was reported.

"The overall level of manufacturing production expanded for the fifth consecutive month in January, as the improved operating environment led to increased volumes of new work.

"Furthermore, growth of output remained significant albeit slightly less marked than one month ago.

"Irish manufacturing companies reported fuller new order books for the fifth successive month in January, reflecting robust growth of new business from both domestic and foreign clients. The volume of incoming new export orders rose for the third month in a row," they said.

However, on the employment front the news was not as good.

"The overall level of manufacturing employment declined for the second consecutive month in January. Companies widely cited the need to improve productivity at their units as the principal reason for further job losses.

"However, although slightly more marked than one month earlier, at 48.7 the seasonally adjusted Employment Index registered a reading indicative of only marginal contraction of the manufacturing labour force," the authors said.