Manufacturing declines despite world recovery
Published 02/02/2012 | 05:00
FURTHER evidence that the Irish economy is back in recession while the world economy recovers came yesterday as new figures showed manufacturing here declined for the third month but continued to turn a corner elsewhere in the world's major economies.
The latest NCB Purchasing Managers' Index, which tracks the health of the manufacturing sector in Ireland, contracted for the third consecutive month in January as output contracted sharply.
The closely watched index slipped to 48.3 from 48.6 in December -- the fastest rate of contraction in two years.
NCB blamed some of the decline on caution about economic conditions which contributed to a decline in new orders.
"The first NCB manufacturing PMI of 2012 has got a familiar feel to it; Domestic demand continues to drag and export orders continue to expand," NCB's Brian Devine said. "2012 is going to be the fifth year in a row in which Irish domestic demand will contract."
Elsewhere, similar indices capturing manufacturing growth showed improvements in US, Chinese and some European economies. Shares rose more than 2pc on leading stock exchanges as the US manufacturing index rose to 54.1 in January from 53.1 in December.
Chinese manufacturing also rose last month as it withstood weaker exports driven by the euro-area debt crisis and a government-induced property slowdown.
The official purchasing managers' index increased to 50.5 in January from 50.3 in December, exceeding forecasts.
"US manufacturing growth points to an acceleration in the economy," said Conrad DeQuadros, an economist at RDQ Economics in New York.
The UK manufacturing index jumped to an eight-month high in January.
In the euro area, the picture was more mixed. The combined eurozone manufacturing gauge beat estimates when it advanced to 48.8 from 46.9 in the prior month, but the performance of Ireland, France, Italy and the Netherlands ensured that the benchmark remained below the crucial 50, which separates growth from contraction.
"There are signs that the global economy, the global manufacturing cycle, is finding its feet," said Nick Kounis, head of macro research at ABN Amro.
"Things are no longer deteriorating. On the other hand, we're not seeing signs of a sharp rebound. We're not out of the woods yet in terms of the European economy at least."
The strength of Germany's economy helped to soften the region's slump and led some analysts to predict that the eurozone may still avoid recession.
That seems to tally with what businesses are saying at the moment.
Peter Loescher, chief executive officer of Siemens, said last week that while he sees a "mild recession" in Europe, the US is showing a "stable environment".