Domestic manufacturing activity up 1.2%

MANUFACTURING activity rose by 1.2 per cent between March and April, according to data published by the Central Statistics Office yesterday.

The seasonally adjusted volume of industrial production for manufacturing industries for the three-month period between February and April was also 1.2 per cent higher than the previous quarter.

Figures on numbers employed in industry show that a significant increase was registered in the final quarter of last year. Employment in industry topped 200,000 in the final three months, a quarter-on-quarter increase of 6,000.

A breakdown of the production data shows that the “modern” sector, comprising a number of high-technology and pharmaceutical industries, registered a monthly increase in production of 2 per cent, while there was an increase of 2.5 per cent in the “traditional” sector.

Neither sector as yet appears to have been affected by the slowdown in the European economy, in evidence since late last year. Most of the output of both sectors is for export to foreign markets.

Meanwhile, more timely European purchasing manager index (PMI) figures published yesterday showed a more negative trend across the continent. Euro zone services and manufacturing output contracted in May for a fourth month, adding to signs the economy is suffering under the worsening sovereign-debt crisis.

A composite index based on a survey of purchasing managers in both industries dropped to 46 from 46.7 in April, London-based Markit Economics said yesterday.

While above an initial estimate of 45.9, the May reading is the lowest since June 2009. The indicator has remained below 50 – indicating contraction – for four months. European companies are cutting back on hiring and spending as the intensifying fiscal crisis makes the economic outlook more uncertain.

While the 17-nation euro zone narrowly avoided falling into a recession in the first quarter, unemployment has reached the highest on record and economic confidence is at the lowest since 2009.

“The PMIs indeed point to a contraction in the second quarter,” said Frederik Ducrozet, a senior euro zone economist at Credit Agricole in Paris.

“The most important development is not so much the expected weakness in the periphery but rather the recent worrying trend seen in France and, to a lesser extent, in Germany, where domestic demand could remain constrained for a longer period than initially expected.”

The euro extended declines against the dollar on the data, down 0.6 per cent on the day and near a two-year low.

European funds investors are growing more concerned about the debt crisis after inconclusive Greek elections raised the prospect of a break-up of the single currency and as Spain struggles to recapitalise its banking system.

G7 finance ministers and central bank governors will today discuss the debt crisis. – (Additional reporting Bloomberg)