Manufacturing declines run into January

Operating conditions in the manufacturing sector continued to deteriorate in January with activity and output falling for the third consecutive month.

The latest monthly purchasing managers’ index for the sector, published by NCB Stockbrokers, fell from a reading of 48.6 points in December to 48.3 points for January.

Despite further increases in new export orders, January’s key extractable points were bleak and predictable: a solid decline in overall new business orders, production declines “at a solid pace” and a quickening in input cost inflation.

“Manufacturing production decreased for the third month running in January. Furthermore, the rate of contraction accelerated, and was the fastest for two years. Respondents mentioned falling demand amid client uncertainty,” the survey stated.

Brian Devine, NCB chief economist, warned improvements would have to be seen if the Irish economy is to grow.

“The first manufacturing PMI of 2012 has got a familiar feel to it — domestic demand continues to drag and export orders continue to expand.

“New orders, overall, continued to contract, but export orders expanded once again. 2012 is going to be the fifth year in a row in which Irish domestic demand will contract and if GDP is to expand — we’re forecasting growth of 0.3% — there can be no further decline in the external environment,” he said.

Employment levels among manufacturing firms, declined marginally in January, for the fourth time in the past five months, following on from a slight increase in job levels in December.

Meanwhile, latest manufacturing figures for Britain show that it could avoid falling into recession this year. January produced a surprising positive bounce for the British manufacturing sector, with its main PMI back into positive territory at 52.1 points, its highest reading since May.

Economists there are suggesting that Britain falling into recession is not a certainty, if the sector continues to recover.