Manufacturing falls for 15th month in a row

LAST month was another difficult period for Irish manufacturing as output fell for the 15th month in a row.

The PMI Index noted output recorded another marked deterioration in the state of Irish manufacturing.

While conditions remained very challenging, the index showed the rate of contraction eased for the third consecutive month to its weakest since last October. Although output, new orders and employment all decreased at weaker rates, they still fell sharply.

The seasonally adjusted NCB Purchasing Managers’ Index an indicator designed to provide a single figure measure of the health of the manufacturing industry, rose to 39.4 in May, from 36.1 in April, showing conditions in Irish business continue to worsen.

A score above 50 signals growth in the sector.

That said, the pace of reduction eased for the third month in a row to its slowest since October 2008.

The rate of decline of new business also slowed in May, the index showed.

Over one third of firms polled (35%) reported falling new business during the month as the global economic downturn hurt export orders, especially those destined for Britain.

The decline in new orders led to increased spare capacity, resulting in a significant improvement in delivery backlogs.

Lower demand was also a key factor in the latest weak figures.

Input buying fell for the 18th month in a row. Pre-production inventory depletion continued in May. The severe decrease was the second-fastest in the series history, slower only than the record seen in the preceding month.

Stocks of finished goods also declined at the second-sharpest pace in the history of the survey, extending the current period of reduction to 13 months.

As manufacturers adjusted to lower output requirements, employment fell sharply again in May.

However, the rate of job shedding eased to its slowest since November 2008.

Input prices fell at a considerable pace over the month. According to respondents, the latest reduction was in part due to increased competition among suppliers, as well as fragile demand for inputs. Increased competition in May also saw a decline in output charges.

During the month Irish manufacturers were forced to offer discounts in order to secure new business.

The pace of reduction remained substantial, despite easing on the preceding month’s series record.