Manufacturing output shows sharp rise in March

IRISH MANUFACTURING output showed a sharp rise in March, increasing at its fastest pace since June 2006 and snapping a trend of three successive monthly declines.

The NCB Purchasing Managers’ Index for manufacturing conditions in Ireland rose from 48.6 to 53.0, the first time it has risen above 50, which indicates expansion instead of contraction, in more than two years.

New export orders increased at the strongest rate since the survey began in 1998. However, demand not only strengthened in foreign markets, but also rose in domestic markets. New orders rose at the fastest rate in 30 months.

NCB said it expects the economy bottomed out in December and January, and predicted expansion in gross national product (GNP) before the second half of 2010. GNP is expected to rise by 2.8 per cent next year.

However, employment continued to fall, marking a 28th month of successive declines. Net job creation is not expected to return until 2011 and will affect consumption, the report said.

NCB said construction investment would be “severely curtailed” due to oversupply in the market, while Government spending would be pulled back.

“In short, in 2010, expect extremely weak domestic demand to counterbalance a large contribution from net exports on the back of global reflation,” NCB said.

US manufacturing expanded in March at the fastest pace since July 2004, indicating factories will be a source of strength for the US recovery in coming months.

The Institute for Supply Management’s factory index rose to 59.6, exceeding the most optimistic forecast. The gauge of exports rose to the highest level since 1989, while orders and production rose at faster rates last month.

Europe’s manufacturing industry expanded more quickly than initially estimated in March, as reviving global demand prompted companies to step up output. A manufacturing index based on euro-area purchasing managers increased to 56.6 from 54.2 in February, London-based Markit Economics said. That’s above an initial estimate of 56.3.

An index of UK manufacturing rose to a 15-year high, a separate report showed. European manufacturers are bolstering a recovery from near-stagnation as the euro’s 5.7 per cent drop against the dollar makes euro-area exports more competitive. – (Additional reporting Bloomberg)