Rate of decline in Irish manufacturing eases to nine-month low

THE RATE of decline in Irish manufacturing eased to a nine-month low in June, according to a new report, as manufacturing figures from across the world suggested the recession was running out of steam in all big economies.

The NCB Purchasing Managers Index (PMI), which measures the manufacturing industry, rose to 42.5 in June from 39.4 in May, the slowest contraction since last September but well below the 50 mark indicating growth.

NCB stockbrokers economist Brian Devine said that even when the PMI rises over the 50 mark it was “highly unlikely to be matched by a rise in employment in the sector”.

The survey, compiled by Markit, found that while the number of manufacturing redundancies last month was the lowest since November, employment continued to contract.

According to the Markit report, employment in the sector has fallen in each of the last 19 months as firms react to falling demand and try to reduce costs.

June marked the 16th consecutive month in a row in which the sector has declined with fragile domestic demand and the ongoing weakness of sterling making new orders hard to secure.

New export orders still fell “solidly” in June, though less sharply than overall new business and slower than in any of the preceding nine months, it said.

For the seventh consecutive month in June output prices declined, with a third of respondents saying they had noted lower output charges, with increased competition the main reason.

In Britain manufacturing activity fell at its slowest pace in more than a year in June as output rose for the first time in 15 months. The CIPS/Markit manufacturing purchasing managers’ index rose to 47 last month from 45.4 in May – the highest since May 2008 and beating analysts’ forecasts for a more modest improvement to 46.5.

In the euro zone, the manufacturing economy contracted less than initially thought in June but there was a significant difference among countries, with Germany lagging behind.

The data showed a slowing in the deterioration in the euro zone’s manufacturing economy for the fourth month running as new orders shrank at a slower pace, indicating the bloc will contract by much less in the second quarter even if growth is a way off. – (Additional reporting Reuters, Financial Times)