Manufacturing grows as employment falls

IRELAND’s manufacturing sector enjoyed its first monthly increase in production for five months, in October; although employment levels continued to fall.

The latest manufacturing purchasing managers’ index (PMI) from NCB Stockbrokers, is something of a mixed bag, even though it does show a reading of 50.1 points (anything above the 50 point mark signifying growth), compared to a level of 47.3 points in September and marked the first foray into positive territory since May.

But, while new orders returned to growth, following four months of decline and there were some reports of improving market conditions, from respondents to the latest edition of the survey; the rise in production wasn’t enough to prevent further job losses in the sector.

Staff levels have declined in the manufacturing area in five of the past six months. The index suggested that the rate of job shedding during October was “solid”.

While welcome, the overall improvement in the index last month was greeted with surprise.

“It is surprising that the index expanded given the global backdrop and the fact that export orders actually declined. Ireland is not going to be able to buck the trend should advanced economies slow; but the fact that the US is looking stronger than the euro area should be a relative benefit for Ireland,” according to Brian Devine, chief economist with NCB.

The previous edition of NCB’s barometer of the manufacturing sector showed that it deteriorated at its sharpest rate for two years in September, with new business and output both plummeting at rapid paces.

Yesterday’s October data showed a bucking of those trends, although new export orders fell for the second consecutive month.

Showing just how fragile short-term optimism levels are, notably many firms said they were reluctant to build stock levels and lowered their purchasing activity.