Manufacturing sector records worst performance period in five years

IRELAND’S manufacturing sector recorded its worst performance in almost five years last month.

The latest NCB purchasing managers index (PMI) — an indicator to measure the economic health of the manufacturing industry — fell to 46 in March, the lowest since July 2003, from 49.8 in February.

The index has been below 50, which indicates contraction, for the last four months.

These are “not encouraging numbers and possibly indicative of slowing activity in Europe,” said Eunan King, senior economist at NCB Stockbrokers.

“The overall index fell markedly below 50 in March with new orders down sharply, export orders in particular. Output, having rebounded in February slowed again in March,” he added.

New order volumes at Irish manufacturers also declined at the sharpest rate since July 2003 last month.

The fall in new work was linked by firms to a general deterioration in demand conditions and in some cases increased international competition.

Data also pointed to a marked fall in new work from abroad, ending a previous growth period spanning nine months.

The report also said reduced workloads led many manufacturers to adjust their staffing levels accordingly in March, extending the period of declining employment in the sector to four months.

It said the latest fall in employee numbers was solid and sharper than in the previous month.

Firms in the Irish manufacturing sector registered a solid contraction of production last month, which was largely attributable to reduced new order levels.

The report also said that many firms commented on higher raw material and oil costs in the month.

It said prices charged rose for the 54th consecutive month, although at a slower pace than February as some firms offered discounts as part of efforts to attract new business.

Also, Irish manufacturers’ input buying fell sharply in March as firms responded to reduced production requirements.