Factory output growth slows according to Investec Manufacturing Purchasing Managers’ Index

A survey yesterday showed the pace of manufacturing growth here slowed last month, as an economist has warned that the housing crisis could impede economic recovery.

Ireland’s manufacturing sector expanded in November, but growth eased to its slowest pace in 21 months on slightly weaker new orders and employment prospects, according to the Investec Manufacturing Purchasing Managers’ Index.

The health reading slipped to 53.3 last month from 53.6 in October, but still comfortably above the 50 line denoting growth, but registering the slowest pace of expansion since February 2014.

Employment growth inched lower to 53.4 from 53.5, its slowest growth since 2013.

Investec Ireland chief economist Philip O’Sullivan said firms remained positive in their outlook, but that an easing of global growth prospects were reflected in more moderate growth suggested by several components the survey.

“We are nonetheless pleased to see an uptick in the rate of growth in new export orders which is likely to have been helped by the sterling strength seen during the month,” he said.

Meanwhile, Jim Power in his annual ‘Friends First Economic Outlook’ said that consumer spending will boost the recovery, with the “prospects for 2016 looking positive”.

“Over the past couple of years the economy has been given a major boost by four factors that are totally outside the country’s control.

"Oil prices have fallen by over 50%; the euro has weakened significantly against sterling and the dollar; the ECB has been pursuing a policy of historically low interest rates; and the strength of growth in the US and UK has insulated Ireland from the sluggish growth in the eurozone,” he wrote.

He projects GDP will grow 6.3% in 2015 and expand 4.5% in 2016.

Threats to the recovery could come from political pressures, the housing crisis and from Britain exiting the EU, he warned.

“It is important that ‘auction politics’ are avoided in the run-up to the election.

"Further afield, an EU exit by the UK would also have considerable implications for Ireland” and the lack of social housing shows the Government is failing to deliver solutions.

“The reality of the housing market at the moment is that the rental market is in total chaos, social housing is inadequate, and house prices are looking dangerously hot,” he warned.