Outlook for manufacturing upbeat

Economists remain upbeat about the manufacturing sector after another strong month of growth.

Latest provisional CSO industrial production and turnover figures, published yesterday, show manufacturing production levels rose by 1.6% in May, on a monthly basis, and by as much as 4.9% when measured on a year-on-year basis.

This growth compared to a 1.3% monthly increase in April and a 2.2% annualised rise that month. The latest data also suggests May was the fourth month this year to show an annualised rise in production levels amongst manufacturing companies.

The figures, according to Davy Stockbrokers’ David McNamara, show further signs that the Irish industrial sector has been shielded from the worst of the eurozone recession.

“The latest Irish manufacturing PMI (Purchasing Managers’ Index) for June was 53.1 points, its highest level since Apr 2011, and an indication of continued expansion in June. Today’s data — allied to the PMIs — is tentative evidence of the defensive nature of Irish industry in the face of the eurozone recession,” Mr McNamara said yesterday.

Merrion Stockbrokers’ Alan McQuaid added that Irish manufacturing remains on course for healthy growth for the year as a whole, making it the third consecutive year of healthy rises.

“Whatever about the short term, we believe that when the world economy regains momentum, Ireland is better placed than most to take advantage of that. Still, as things currently stand, the Irish manufacturing sector is on course to post an overall increase in output for the third year running in 2012, with a rise of around 2% projected,” he said.

“While external factors don’t look particularly encouraging for the manufacturing sector at this point in time, Ireland’s focus on relatively recession-hardy exports such as pharmaceuticals and its improving competitiveness should help it weather the storm better than most. Indeed, the manufacturing Purchasing Managers’ Index hit a 14-month high in June, suggesting the sector is holding up quite well all things considered,” he said.

The tech/chemical-heavy ‘modern’ sector drove May’s figures, showing a 5.8% monthly increase in production levels, while the ‘traditional’ sector fell — following a good showing in April — by 4.8%.