SIGNS of economic recovery are starting to emerge with a strong 9.5% rise in manufacturing output recorded in the 12 months to the end of May 2010.
The latest seasonally adjusted CSO figures also show a solid boost to industrial output which rose 7.5% over the same period.
The data published yesterday highlighted that the most significant change was in pharmaceutical sector where production rose 25.6%.
Other sub-sectors did not fare as well as the figures show production of computer, electronic and optical products fell 28% in the same period.
The volume of industrial production for manufacturing industries for the three-month period from March to May was 3.25% higher than in the preceding three-months, the CSO figures show.
The modern sector, comprising a number of high-technology and chemical sectors, showed an annual rise in production for 13.9% for May compared to the same month in 2009, while traditional sectors fell 0.8%.
Industrial turnover for manufacturing industries was 6.6% higher in the three month-period from March to May compared to the previous three month period, according to the figures.
Commenting on the figures Alan McQuaid, chief economist, Bloxham Stockbrokers, said the pick-up in output reflects a number of positive factors.
The recovery in external demand seems set to be complemented by the improving competitiveness of Irish firms, he said. A falling cost base reflecting a “decline in wages and prices across the economy is expected to place Ireland in a very favourable position to benefit from the recovery in trade flows”, he said.
He warned that the export-led growth in the economy could be impacted by what he called “sector specific effects”.
The chemicals sector, which accounts for around half of overall merchandise exports, will not grow as strong as other sectors.
Given the pick-up in global demand anticipated this year and the consequent positive outlook for exports, manufacturing output is projected to increase over 5% on average in volume terms in 2010, he said.
“The ‘traditional’ sector looks set to make a positive contribution as the year goes on, reaping the benefits of stronger sterling and the significant cost adjustments made over the past twelve months or so”, he said.
Economists have warned that the economy has a lot of ground to make up to reach full recovery. Growth this year will be no more than 1% while the construction sector is set to lose further jobs. Employment in that sector could fall to 110,000 by the end of next year, down from 274,000.
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