Manufacturing output up again

THERE was good news for Irish manufacturers yesterday as a survey of output and new business orders showed conditions continued to improve during December.

The monthly Purchasing Managers’ Index (PMI), which is published by NCB stockbrokers, registered increased demand and greater output in the manufacturing sector for the fourth month in a row.

The rate of improvement was slightly lower than the previous month but was still the second-highest monthly jump since July 2002.

Eunan King, senior economist at NCB, said the figures were encouraging but noted that the pick-up in activity had not yet resulted in increased employment in the manufacturing sector.

The survey suggested most firms kept employment levels static during the month and achieved higher workloads through increased productivity and by being more efficient. The survey also said the volume of work backlogs fell slightly as businesses coped with additional demand.

New orders increased during December, with exports recording a particularly strong performance. Businesses surveyed said demand picked up both within the eurozone and in the US. Economic growth in the US outstripped the negative effects of the dollar’s continuing slide against the euro.

Output prices were higher for the third month in a row, which businesses put down to increased input costs such as more expensive oil or metals. Firms surveyed said they suffered from strong price competition and could not raise prices by as much as they needed in order to maintain margins.

The overall PMI index registered 52.6 in December, which was down from 52.8 the previous month but still comfortably ahead of the benchmark 50.0 level. An index below 50.0 represents a contraction in manufacturing activity and is seen as a bad sign for the sector.

Equivalent figures were released for the eurozone and Britain and Northern Ireland yesterday. The British survey showed an increase in manufacturing for the tenth successive month and beat most economists’ forecasts.

Figures for the eurozone showed manufacturing activity ahead for the fourth consecutive month, driven largely by a strong performance in Germany.

There was further good news for the market when monthly figures from the American Institute of Supply Management (ISM) showed growth in American manufacturing beat expectations to record a 20-year high in December.

The employment component of the ISM index also rose and confirmed hopes that the US labour market was beginning to expand.