Manufacturing contracts for sixth month

The manufacturing sector contracted for the sixth successive month in May with new orders and output falling sharply.

The purchasing managers' index (PMI) published by NCB Stockbrokers showed a reading of 45.2 in April, up marginally from the ten-year record low recorded in April of 44.7.

The index measures output, new orders, export orders, employment, stock levels and prices and any reading below the 50 mark indicates contraction. The PMI has been below 50 for the last six months.

Four of the five components in the index showed contraction last month.

While the slowdown in the construction sector was hitting domestic demand the index also noted that demand from abroad also fell last month.

Exchange rate movements, and in particular the strength of the euro against sterling has seen new export orders declining at the sharpest pace since June 2003 to 42.2.

According to the index, costs for manufacturers increased in May due to higher oil and metal prices.

Lower workloads have prompted many firms reduce their workforce and the index noted that staffing levels have fallen every month since December.