Growth in industrial output slows

INDUSTRIAL output grew at its slowest pace since last April achieving a growth rate of 1.7% year-on-year in February.

The latest Central Statistics Office figures show that manufacturing output by foreign firms will be the key driver of industrial output in 2011.

Overall, the figures show a subdued start to the year, but chief economist with Bloxham Stockbrokers, Alan McQuaid, is optimistic that manufacturing output will rise again in the current year.

The rise in volume was led by a 9.6% increase in the manufacturing of computer and electrical products.

Production in the “modern sector”, which includes technology and chemical companies, showed a 1.5% increase year-on-year.

An increase of 1.7% was recorded in the traditional sector of the economy, the figures showed.

Taking all factors into account, including thedisappointing start to the year, “we still think we will see another large single digit increase in the volume of manufacturing output in 2011, especially as the manufacturing PMI hit an 11-year high in February,” said Mr McQuaid.

The strong manufacturing export performance should “provide the platform for a sustainable Irish economic recovery over the next few years,” he said.

Seasonally-adjusted the volume of total industrial output for the three-month period November 2010 to January 2011 was down 0.3% compared to the preceding three-month period.

Despite the setbacks indicated by the figures, the employers’ body IBEC also saw the CSO figures as positive.

In a statement it said that despite a slowdown in the rate of output “it looks like 2011 will be a buoyant year for manufacturing output.”

Commenting on the latest figures from the CSO IBEC’s senior economist, Reetta Suonpera said the figures suggest manufacturing got off to a relatively weak start for the year.

Output in the hi-tech modern sector grew by 1.5%, while the traditional sector posted growth of 1.7% which was a “substantial” slowing of the pace of growth seen at the end of last year.

She pointed out, however, that January 2010 witnessed a very strong recovery in production volumes, so the apparent slowdown is distorted by that fact.

The data may also suffer from a delayed effect from the bad weather conditions at the end of 2010, she said.

The purchasing managers’ index for manufacturing also continues to point towards strongly expanding activity, “so we would expect the output numbers to recover in the coming months and, overall, 2011 should be a strong year for the manufacturing sector,” she said.