Fresh NCB data shows the economy is still struggling
But across rest of the globe manufacturing increases to meet export demand
Published 02/02/2010 | 05:00
THE first set of fresh economic data for 2010 suggests the economy here is still struggling, despite picking up in Europe, China, India and the US.
The NCB Purchasing Managers Index fell to 48.1 in January from 48.8 in December as output in Ireland shrank again last month.
While last month's snow and icy roads played a role in curbing economic growth, even worse weather elsewhere in Europe does not appear to have crimped manufacturing activity. For example, manufacturing in Britain expanded at its fastest pace in 15 years last month.
"The adverse weather conditions, which prevailed in early January, caused havoc with businesses on both the supply and demand front," wrote NCB's Brian Devine yesterday. "Consequently, it is difficult to decipher whether the fall in demand was solely due to the weather or simply that demand continues to remain weak."
Production in Ireland fell at its sharpest pace in five months. Other than a slight rise in November 2009, output has contracted in each month since March 2008. In January, new business also fell for the first time in three months.
The manufacturing figures were eagerly awaited by economists looking for clues about the likely performance of the economy this year.
Other indicators such as unemployment figures, tax revenue and consumer confidence, all due to be published this week, will give further indications of what is happening after the unprecedented collapse in economic growth over the past two years.
Elsewhere around the globe, purchasing managers in the major economies all saw further signs that manufacturing industry was picking up. The index of manufacturing in the 16-nation euro region increased to a better-than-expected 52.4 from 51.6 in December.
European companies are increasing production as a global economic recovery spurs exports.
China, the world's third-largest economy, sustained its manufacturing expansion in January, separate figures showed yesterday.
"Manufacturers took the biggest hit and are now catching up," said Christoph Weil, a senior economist at Commerzbank AG in Frankfurt. "The recovery will continue for another couple of months."
In the US, manufacturing expanded at the fastest pace since August 2004, as the sector spearheads the recovery there from the worst recession since the 1930s. The index rose to 58.4, higher than anticipated, from December's 54.9.
After job cuts of 7.2 million in the last two years, some US companies, such as Ford, are beginning to hire again, laying the groundwork for sustained gains in spending.
"Manufacturing is leading the economy," said Zach Pandi, an economist at Nomura Securities. "It's the one sector that clearly is hot, whereas the overall economy is lukewarm."
Corporate spending on new equipment is also beginning to pick up. Texas Instruments, the second-largest US chipmaker, said it would spend almost $1bn this year to expand three factories and open a fourth to fill orders.
A separate report yesterday showed US personal spending rose 0.2pc in December, the third straight gain, according to the Commerce Department in Washington. Incomes climbed 0.4pc, exceeding expectations. China, the world's third-biggest economy, also sustained its manufacturing expansion in January as export orders jumped.
The HSBC purchasing managers' index rose to a record 57.4 from 56.1 in December, following the biggest gains in input and output prices since July 2008.
Export sales rose at a "near- record rate". The HSBC survey uses the same methodology as the one used by NCB in Ireland and other organisations around the world.
Curiously, an official measure showed a slight dip. India and Australia also posted an expansion in January.