Manufacturing spurs steady growth

THE economy continues to show signs of steady improvement, with the manufacturing sector growing once again in August.

NCB Stockbrokers Purchasing Managers Index (PMI) for August shows the sector is still growing, though the reading, at 54.7, was down slightly on July’s figure. NCB senior economist Eunan King said although the month did see a small decline, overall, the manufacturing orders were holding up well and there was a buoyancy in orders from the US.

He said this was encouraging given doubts about the strength of the US economy in recent months. “Manufacturing production rose for the twelfth consecutive month in August, with the rate of expansion easing only marginally from the previous month’s strong pace. As well as processing new orders, manufacturers were again able to redirect any spare capacity to help clear existing orders and, as a result, backlogs of work declined modestly for the fifth month running,” the report said. The report said manufacturers added to the size of their workforces for the seventh month in a row in August, although the rate of growth of employment remained only slight.

“Meanwhile, average prices charged for manufactured goods continued to rise at a substantially slower rate than input costs, suggesting that manufacturer’s margins were again squeezed.”

Growth worldwide softened as high oil prices squeezed margins and first signs of an international economic slowdown dented export demand, according to surveys of purchasing executives.

Analysts say rising costs of energy and other raw materials like steel risk slowing employment growth around the world should they persist.

In the United States, the Institute for Supply Management said yesterday its index of manufacturing activity in the world’s biggest economy fell to 59.0 in August from 62.0 in July.

The Reuters Eurozone Purchasing Managers’ Index showed the bloc’s manufacturing sector grew at its slowest pace in five months, while Britain reported a fall in new export orders for the first time in more than a year. Weakening demand from China helped trim manufacturing growth in Japan, where the PMI survey was published on Tuesday.