Recovery signs in manufacturing

THERE were tentative signs of hope for Ireland’s manufacturing sector last month, with data showing a first rise in output for nearly two years; but the sector is still technically contracting.

The latest Purchasing Manufacturers’ Index (PMI) for the sector, published by NCB Stockbrokers, showed a slight monthly rise in November, from 48 points to 48.8 – which, as it is still under the neutral 50-point mark, means the sector is in negative territory. Technically, operating conditions here have worsened over the past two years.

However, according to Brian Devine, economist at NCB, the November statistics show signs that Irish manufacturing and the economy, as a whole, are beginning to improve.

“While the headline PMI did not breach the 50 mark, output and new orders expanded in November for the first time since February 2008. Increased demand, particularly from abroad, drove new orders higher on the month. The latest output readings are encouraging and corroborate what a number of other indicators have been showing; the Irish economy is stabilising and forming a base from which to grow,” he said.

He added: “The deterioration of business conditions was registered despite rises in output and new business. Higher output largely reflected new order growth, which in turn was attributed to strengthening demand.

“New export orders increased for the second time in three months and at a faster pace than overall new business,” he said.

The NCB data also showed a continued fall in employment levels among Irish manufacturing firms, last month.

However, job losses were at their slowest rate for a year-and-a-half. Both input and output prices declined – the latter at an increased pace than in October, as competition and lowering demand forced companies to offer more discounts.

Manufacturing firms also reduced their purchasing activity in an attempt to lower inventories. November actually saw a steeper rate of input buying declines than in the previous month.

Meanwhile, for the combined eurozone, the manufacturing sector showed growth for the second consecutive month, in November, and at a faster rate than initially expected.

The eurozone PMI rose from 50.7 points to 51.2 points last month, led by Germany, France and Italy. Spain was the only one of the big Eurozone economies not to show monthly improvement – by contrast, showing an increased rate of contraction.

The eurozone figures also detailed how new business order levels were at their highest since August of 2007, while output levels reached a two-year high.


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