Manufacturing improved last month

The Irish manufacturing sector continued to strengthen in the final month of 2010, despite the inclement weather, according to the latest NCB Purchasing Manufacturing Index (PMI).

The index, which measures the health of the manufacturing sector, rose for the third consecutive month to 52.2 in December, up from 51.2 the previous month – the largest jump since May. A reading over 50 indicates that the manufacturing industry is expanding.

The increase was driven by an increase in output, new orders and an expansion in employment. The rise in new orders was due primarily to an increase in export orders, particularly from Asia, the Middle East and the UK, reflecting the continuing importance of the export sector to the economy.

Irish manufacturing firms raised their employment levels for the first time in seven months in December, albeit marginally, the PMI shows. The increase in employment levels was mainly due to increased workloads.

The index also shows that output prices reduced last month despite sharp input cost inflation. The drop in prices was the third such drop in four month, as firms offered discounts in an attempt to stimulate new business.