Saturday 22 October 2016

Mixed bag for manufacturing results in Europe and China

Colm Kelpie and Michael Cogley

Published 02/10/2015 | 02:30

A sharp increase in new orders from abroad helped drive growth in Ireland's manufacturing sector last month.

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That said, the rate of expansion in production eased to a 19 month low, according to the latest Purchasing Managers' Index (PMI) for the sector.

Separate data showed that Eurozone manufacturing growth weakened slightly last month on the back of a slower pace in new orders and output.

And activity in China's vast factory sector shrank again in September as demand softened at home and abroad, fuelling fears that the world's second-largest economy may be cooling more rapidly than expected a few months ago.

Philip O'Sullivan, economist with specialist bank Investec, expressed relief at the slight rise in production after disappointing data the previous month.

"Notwithstanding the troubled signs in a number of emerging markets and uncertainty around central bank actions in Ireland's key non-Eurozone trading partners, we continue to view the sector as having more tailwinds than headwinds and expect to see a stronger finish to 2015," he said.

The seasonally adjusted PMI rose to 53.8 in September, from 53.6 the previous month.

But the improvement was still weaker than experienced earlier in the year.

Supporting the overall improvement in operating conditions was a marked increase in new orders.

Panellists reported that rising new business from abroad had helped to support growth of total new orders.

New export business rose sharply, with the rate of growth slightly stronger than in August, with the UK a key source of business, helped in large part by favourable currency movements. Employment rose for the 28th consecutive month, amid rising workloads.

Elsewhere, Euro zone manufacturing growth weakened slightly last month.

And in China, manufacturing shrank in September, sparking further fears about a slowdown in the world's second biggest economy. The weak readings add to fears that a steady stream of stimulus measures has been unable to keep growth from slipping below 7pc in the third quarter, which would be the weakest level since the global crisis and put more pressure on jittery financial markets.

Irish Independent

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