Export order index in decline

IRISH manufacturing hit a 14-month low in February.

It also recorded its fifth consecutive monthly decline as demand in Europe stayed weak.

In February the NCB Purchasing Managers Index fell from 48.8 to 48.3.

Anything below 50, the neutral point, shows contraction above 50 expansion. While still in negative territory the decline was modest.

NCB’s chief economist, Dermot O’Brien, said: “Conditions in the manufacturing sector remained soft in February, particularly in respect of exports. The export order index was the lowest since October 2001, mainly due to weak demand in Europe.”

During the month output costs also rose. Research shows they rose steeply despite the fall off in demand and they were up for the 11th consecutive month.

Manufacturing suffered further job cuts for the sixth month in a row.

However the decline in activity overall has been relatively modest compared with expectations and there is some optimism that the drift downward may be coming to an end.

Manufacturers across Europe and Japan are still struggling also, due to worries about economic uncertainties and the likelihood of war in Iraq.

Reuters surveys showed that manufacturing activity shrank in February in Japan and Britain, while in the eurozone the sector managed to stabilise with the help of better German export orders.

In the US the outlook is improving however and this may boost the outlook for the rest of the world when the War issue is resolved, economists said.

"It's hard to see a recovery in confidence being sustained," said Ken Wattret at BNP Paribas in London.

The Reuters Eurozone Purchasing Managers' Index crept above the 50 level for the first time since August to register 50.1 in February from 49.3 in January, beating a consensus forecast of 49.5.

That was partly due to the best growth in new orders for two years in Germany, the region's biggest and most sluggish economy.

The orders seemed to be driven partly by customers stocking up for fear that war

Official data last week showed manufacturing investment had fallen to its lowest in almost 20 years in the fourth quarter of 2002 in he UK.

Financial markets showed little reaction as the data were broadly in line with expectations.

"No great surprises here but it does show manufacturing is in the doldrums and likely to record a decline for the first quarter," said Alan Castle, economist at Lehman Brothers in London.