Manufacturing growth slows slightly

MANUFACTURING activity continued to grow in June, but at a slower pace than in May, according to the latest figures from NCB Stockbrokers.

Its Purchasing Managers' Index recorded 53.7, compared with 54.5 in May. Above 50 shows the sector to be growing while under 50 indicates decline.

NCB economist Eunan King said export orders to the US, Asia and Britain remained robust, while employment growth picked up slightly.

With firms becoming more cost driven, higher productivity is bridging the gap caused by rising demand.

It suggests a growing awareness of the need for research and development that is starting to feed through to Irish manufacturing. It was a point stressed by Frank Ryan, chief executive, Enterprise Ireland, when he launched the state body's report for 2003.

Wage restraint of itself will not be enough to pull manufacturing in Ireland through, he said.

Productivity gains would have to become a vital cog in the wheel if firms are to stay competitive and continue to survive in an increasingly tough trading environment.

Despite the productivity gains, average costs continued to rise sharply, with this index recording 64.7. That was due to a shortage of raw materials on world markets and was not attributable to wages, it emerged.

Prices charged by firms rose again, but competition kept price inflation below that of costs, with this index coming in at 53.7.

While the index was down slightly month on month, the figures record the 10th month in a row where new business placed with Irish manufacturers rose.

On an objective measure Mr King said the rate of growth was marked even if it was down a bit on the previous month.

Overseas demand was not as good as it might have been, but the month was nonetheless marked by solid demand from the US, Asia and Britain.

This year experts are looking to renewed buoyancy in the US economy, while the European economies look pretty sluggish.

Despite the better outlook coming from the US and upbeat forecasts coming out of Asia, the rate of growth in output was also down in the June survey.