October manufacturing bucks global trend with expansion
THERE are further signs that the Irish economy is improving slightly while the world economy sags ominously.
Manufacturing here expanded in October for the first time in months while the Small Firms Association reported that members plan to take on staff.
The NCB Purchasing Managers' Index, one of the country's most closely watched economic indicators, suggested yesterday that manufacturing production rebounded in October as new orders increased for the first time since May.
The seasonally adjusted index registered 50.1 last month, fractionally above the 'no-change' mark that separates improvement from deterioration.
The reading was up sharply from 47.3 in September, and showed the first improvement in operating conditions since May.
The rise was prompted by an increase in new orders following four successive months of decline amid signs of improving market conditions.
New export orders fell for the second consecutive month, however, suggesting some of the improvement is coming from the domestic economy rather than the rest of the world. Despite these gains, employment levels fell once again.
"It is surprising that the index expanded given the global backdrop and the fact that export orders actually declined," said NCB economist Brian Devine.
"Ireland is not going to be able to buck the trend should advanced economies slow."
The Small Firms Association said in a separate report that the pace of job losses in small businesses slowed in recent months and added that most companies now want to hire permanent or temporary staff in the months ahead.
The majority of companies expect staffing levels to increase or remain the same in 2012.
Part of the explanation for the relatively good performance of the Irish economy last month came when the British government said yesterday that the economy there grew faster than economists had forecast in the third quarter.
Gross domestic product rose 0.5pc from the second quarter. Britain is Ireland's largest trading partner and takes a lot of exports from the so-called traditional sector which employs many more people than the pharmaceutical and technology companies that account for the bulk of our exports.
The party may be over, however.
The UK version of the Purchasing Managers' Index survey, also released yesterday, showed manufacturing activity in October fell at its sharpest monthly rate since June 2009 when Britain was still in recession.
British Chancellor George Osborne acknowledged that the country faced a rough ride as growth in Europe and the news of a Greek referendum introduce fresh uncertainty.