Manufacturing sees further dip in new business

IRELAND’s manufacturing sector suffered further in December, with the decline in new business levels accelerating and companies seeing a second consecutive monthly deterioration in operating conditions.

The monthly Manufacturing PMI (Purchasing Managers’ Index), from NCB Stockbrokers, was fractionally up on November’s reading — albeit just from 48.5 points to 48.6 points — but remained well below the neutral 50 point mark, which separates a sector in decline and one in growth.

Respondent companies, to the December edition of the survey, blamed the fragility of the economy and the ongoing uncertainty in the wider eurozone for the fall in new business orders during the month.

“Moreover, the rate of contraction was solid, and sharper than that seen in November,” the survey’s notes added.

The new business orders reading was down from 49.7 points in November to just 46 points in December.

Brian Devine, chief economist with NCB Stockbrokers, pointed out export orders did, however, signal a slight expansion last month — registering a positive index reading of 50.8 points, compared to one of 49.9 points in November’s survey.

“Despite the slowdown in global growth, Irish exports will remain positive in 2012. We, once again, expect a large positive contribution from net exports in 2012 and for this contribution to outweigh the continued weakness in the domestic part of the economy.

“Thus, we expect positive GDP — of around 0.7% — but for employment to decline for the fifth year in a row,” he added.

December marked the first month since August where employment levels, amongst manufacturing companies, rose, though the increase was marginal ahead of firms embarking on new work projects.

Last month also saw an increase in input costs and declining output prices; the former due to a weakening of the euro against sterling and the latter due to strengthening competition in the marketplace.