Manufacturing industry decline slows down

THE rate of decline of the manufacturing industry has slowed but employers are still shedding jobs and dropping prices, the NCB Purchasing Managers’ Index indicates.

The index hit a four-month high in August but remained below the critical break-even point of 50, NCB Stockbrokers said yesterday.

The index of business conditions in the manufacturing economy in August rose to 48.1 in August from 45.8 in July, NCB said. It was the 11th month in a row the index has been below 50, indicating continued contraction of the sector, but NCB said the sharp rise suggested the rate of deterioration had eased markedly and was the least severe since April.

NCB senior economist Eunan King said: “the index, while still below the 50 level, shows a marked bounce to the highest level since April. This would appear to be in response to an improving situation both in the domestic and foreign economies. Output prices remain soft, but input prices recorded a marginal firming.”

The index compiled by NTC Research shows that production levels were scaled back for the eighth successive month in August. However, the report said that mirroring the trend seen for new business, the rate of decline of output was only slight, and the slowest during the current downturn.

“In line with reduced levels of output and new business, Irish manufacturers were again found to have pared back staffing levels at their units in August. However, the rate of job-shedding was only modest, and the slowest for seven months.” the report said.

The Irish PMI improvement lags European levels where NTC Research for Reuters Group Plc showed a rise to 49.1, its highest in six months, from 48.0 in July.

However, the continued decline in manufacturing activity in Ireland goes against the European trend as the pan-European index for new orders increased to 50.1.