Manufacturing to lead recovery

THE manufacturing sector returned to strong growth last year — up 15.7% — with experts saying it will help lead the economic recovery.

Production for Ireland’s manufacturing industries for November was 15.7% higher than in November 2009. This was the best performance on a monthly basis in 2010.

However, the seasonally adjusted industrial turnover index for manufacturing industries was 1.4% lower in the three-month period September 2010 to November 2010 when compared with the preceding three month period, according to the Central Statistics Office (CSO).

In the basic pharmaceutical products sector, production rose almost 37% while in the computer electronic and optical products sector production fell 18%.

Bloxham analyst Alan McQuaid said things appear to have improved last year with manufacturing output in the first 11 months of 2010 up 7.4% on average on the same period of 2009, while total production was 6.8% higher.

“It now looks like manufacturing output will post an average increase in volume terms for 2010 as a whole of between 7% and 8%, a very impressive performance all things considered,” he said.

The “modern” sector, comprising a number of high-technology and chemical sectors, showed an annual increase in production for November 2010 of 21.7% and an increase of 3.2% was recorded in the “traditional” sector.

“The bottom line is that external demand will be key to how Irish manufacturers perform in the coming months. Any weakening of the global economy will clearly have an adverse impact on output/exports.

“That said, Irish manufacturers are benefiting from improved competitiveness, with the lowering of the cost base arising from the decline in wages and prices across the economy expected to place Ireland in a very favourable position to benefit from the eventual recovery in trade flows,” said Mr McQuaid.

Employers group, IBEC said Irish industry has shown itself to be exceptionally flexible and companies have been able to cut costs and improve productivity in response to the crisis.

IBEC senior economist Reetta Suonperä said: “As global demand recovered, the benefits became apparent during 2010.”

Some of the sectors that saw particularly steep falls in output during 2009 have returned to very strong growth in 2010 thanks to recovering demand and a weaker exchange rate.

Machinery and equipment, rubber and plastic and basic metals all posted double-digit growth in November.