Irish manufacturing rises to 9-month high

The rate of decline in Irish manufacturing eased to a nine-month low in June, according to a new report published today.

The NCB Purchasing Managers Index (PMI), which measures the manufacturing industry, rose to 42.5 in June from 39.4 in May, but remained well below the 50 level indicating growth.

NCB Stockbrokers economist Brian Devine said 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, complied by Markit, found that while the number of manufacturing redundancies last month was the lowest since last November, employment continued to decrease at a "severe" pace.

Smurfit Kappa today cut 140 jobs, or 80 per cent of its staff, from its paper converting factory in Togher, Co Cork, due to the severe downturn in the manufacturing sector.

The loss of a further 120 jobs at the Bausch & Lomb factory in Co Waterford today, accounting for 10 per cent of the workforce, provides further evidence of the pressures facing the sector.

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

Figures released yesterday showed the State's gross domestic product dropped by a record 8.5 per cent on an annual basis.

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 harder 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.

The report indicted suppliers were continuing to offer discounts to boost demand, but input prices fell at the weakest pace so far in 2009.

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