ANALYSIS:Both multinationals and indigenous manufacturers have enjoyed an upward trend in 2010, writes DAN O'BRIEN

INDUSTRIAL PRODUCTION expanded in June, suggesting that the manufacturing sector continues to benefit from the international recovery.

Chart One illustrates (top right) recent monthly and quarterly developments in industrial production. As is clear, 2010 has been a good year for manufacturing, with historically high levels of production being recorded. In June, seasonally adjusted output grew by 1.2 per cent over May to reach one of the highest monthly levels on record.

On a quarterly basis, which smooths out the big monthly swings to which Irish industrial production is prone, output in the April-June period of 2010 fell back when compared to the first three months of the year.

The decline of 3.6 per cent was not unusual, and the level of output was the third highest on record, following the highest ever on record in the first quarter (the data series was first compiled in 1980).

As Chart Two shows, both the modern manufacturing sector, which is dominated by foreign multinationals, and the traditional sector, which is largely indigenous, have registered an upward trend in output in 2010.

In June, production in the modern sector increased by 1.6 per cent month on month. By contrast, the traditional sector fell back by 1.8 per cent.

On a quarter-on-quarter basis, the positions were reversed, with output in the traditional sector growing between the first and second quarters of the year, while the modern sector shrank output.

Industry classified as “modern” accounts for two-thirds of industrial output, but accounts for less than one-third of employment (as of the final quarter of 2009, the latest data available).

And yesterday’s figures show that in 2009 job losses in the modern sector were much the larger of the two sectors, absolutely and relatively.

From the first to the final quarter of the year, employment fell by 8,000, to just over 70,000, in the modern sector.

In the traditional sector, more than 130,000 people were at work at the end of 2009, down just over 3,000 on the year’s beginning.

Other than output and employment, the Central Statistics Office also released its index of new industrial orders, a “leading” indicator of future developments.

This measure declined by 5.4 per cent month on month in June, but remained at its second highest level since April 2009. Such indices are usually good indicators of future near term production patterns.

The Irish index has tended to reflect current patterns rather than future ones and thus has limited predictive power.

Industrial production: 5.9% rise in year to June

THE VOLUME of industrial production rose 5.9 per cent in the 12 months to the end of June, according to new figures from the Central Statistics Office, writes Charlie Taylor.

Volume was up 1.2 per cent from May to June, the data shows.

The “modern” sector – which comprises a number of high-tech and chemical industries – showed a monthly rise of 1. 6 per cent, while traditional industrial production was down 1.8 per cent.

Provisional estimates for the second quarter of 2010 show that production volumes fell by 3.6 per cent compared to the first three months of the year. The most significant contribution to this decline was a 5 per cent fall in the pharmaceutical sector.

The seasonally adjusted industrial turnover index for manufacturing industries was 5.8 per cent higher in the second quarter compared to the first three months of the year and was 1.6 per cent higher on an annual basis.

On the same basis both the modern and traditional sectors showed a rise in production. The modern sector saw an increase of 4.9 per cent over the year, while the traditional sector saw production increase by 7.5 per cent.