Services main job driver in economy

INDUSTRIAL production is continuing to decline but a leading economist says the service industry have replaced manufacturing as the main driver of job creation.

Over the past 10 years 99% of jobs created in the economy have come out of the services, said Eunan King, senior economist, NCB Stockbrokers.

While manufacturing is important the balance of the Irish economy has changed considerably, he said.

Seasonally adjusted the volume of manufacturing output for the three months from March to May showed a decline of 3.6% on the preceding three months.

Annualised the CSO said production for all industries in May 2005 was 3.4% lower than last year.

The modern sector, comprising high-technology and chemicals, recorded a decrease for May of 2.3% against a fall of 5.3% in more traditional sectors.

Robbie Kelleher, chief economist, Davy Stockbrokers warned however, we could be losing competitiveness as an economy in the indigenous sector.

He was uncertain as to why basic chemical production has collapsed in the last year, having been up 30% in the previous 12 months.

It could have something to do “with the bill passed in the US last year to encourage profit repatriation.”

In the case of Irish owned industries the weakness in demand for the near-60% of output that is not exported “is puzzling”, he said.

It may be cheap imported goods “are having a big impact on the marketplace and indigenous industry is struggling in the domestic market through a lack of price competitiveness.”

Philip O’Sullivan, economist, Goodbody Stockbrokers, said the rends were disappointing as things stand. He said however: “We remain optimistic that the second half of the year will see a recovery from the poor start to the year.”