No manufacturing upturn likely - ESRI

There is no sign of an early upturn in the manufacturing industry, according to the latest IBEC/ESRI survey, with weak expectations for productions, declines in order books and the likelihood of falling employment.

The overall trend of the survey had been to show some improvement in the early months of last year, before expectations turned down in the latter months.

The latest survey, taken in the first three weeks of January, shows no sign of recovery - not surprising given the poor international business climate. The Monthly Industrial Survey is carried out among a statistically representative sample of manufacturing firms by the Economic and Social Research Institute (ESRI). It is sponsored by business lobby group IBEC.

The figures show that, looking at production levels in December, 23 per cent of firms reported a rise, with the same percentage reporting a fall. The remaining 54 per cent reported no change. The pattern for expectations for future production was similar, with 21 per cent of firms anticipating a rise and the same number expecting a fall. The weakest area in production terms was consumer goods, with sectors such as clothing, textiles and footwear appearing to be in a difficult period.

Most of the major sectors said they expected production to fall, according to Mr David Croughan, chief economist at IBEC, with only the capital goods sector showing more positive signals.

Looking at total order books, the trend looked weak, with 34 per cent of companies reporting a fall and just 7 per cent seeing an improvement, compared to the previous month.

These figures hold out "little hope of a return to more robust growth rates in the short term", according to Mr Croughan.

The trend in new orders was also weak, with the sole exception of the chemicals sector, which has been growing rapidly, as confirmed by recent export figures.

There appeared to be a downturn in expectations for sales in the home market, with 26 per cent anticipating a fall in the months ahead against just 8 per cent expecting a rise.

However, some encouragement was provided in the export sector, with 23 per cent anticipating a rise in sales in the months ahead and 12 per cent looking at a fall, perhaps suggesting that the strong export trend shown in the recent Central Statistics Office figures for November may be maintained into 2003.

There has been a string of redundancy announcements from industry in recent weeks and this survey shows no signs of this trend coming to an end. Of the firms surveyed, 34 per cent expect employment to fall in the months ahead against 11 per cent anticipating an increase. The remainder, 55 per cent, believe employment will remain at current levels.

The office and data processing machinery sector expects to increase employment - perhaps pointing to some stabilisation in this sector - but in most other sectors businesses expect employment to fall.

Capacity utilisation in manufacturing has fallen from 75 per cent in October to 72 per cent in the latest survey.

A strong majority of firms - 82 per cent - saw no change in their competitive position during the month. However the majority of the remainder, 17 per cent, saw a deterioration, with just 1 per cent seeing an improvement.