Manufacturing falls back to record low

A drop in new orders and falling employment saw output from the Republic's manufacturers contract to record lows last month.

The NCB Stockbrokers' purchasing managers' index (PMI) for manufacturing shows that production contracted "at a marked rate" last month to 44.7, in line with the record low recorded in April.

Any reading below 50 indicates contraction and June was the seventh consecutive month where the sector declined. The May PMI was 45.2.

"Anecdotal evidence suggested that deteriorating domestic economic conditions contributed to the latest contraction of Irish manufacturers' new order volumes", the report noted.

Orders from outside the country fell for a fourth consecutive month in June as companies reported that the strength of the euro was impacting on demand.

This fall in demand saw employment levels in manufacturing drop "at the second-sharpest rate in the survey history" and for the seventh successive month. The June employment reading was 43.4, the second sharpest contraction in the index's ten-year history.

Input buying, which measures the purchase of raw materials used in manufacturing, rose at its sharpest rate for almost four years, with many firms noting that the oil costs had increased since May.

Overall inflationary pressures on manufacturers increased last month as the cost of raw materials rose at the fastest rate for 49 months. Prices for oil, plastics and metals all increased with these cost pressures prompting manufacturers to raise their prices.

Anecdotal evidence indicated that falling orders had led to reduced stock requirements, the NCB report found.

NCB chief economist Eunan King said: "Conditions in the manufacturing sector remained challenging in June and are likely to remain so as new orders continue to contract."

"The deterioration in both domestic and external economic conditions coupled with the strength of the euro is adversely affecting demand".