Significant slowdown in manufacturing growth, NCB survey shows
Published 02/07/2010 | 05:00
GROWTH in the Irish manufacturing sector weakened significantly in the last month, new research has shown.
The Purchasing Managers Index (PMI), compiled by NCB stockbrokers, dropped to 51.8 in June compared to 54.1 for May.
A mark of over 50 indicates growth, less than 50 suggests activity is declining.
Despite the slowing down of the market, NCB remained positive on the PMI results.
"The rate of growth eased to the weakest in the current sequence of expansion. [However] manufacturing production increased for the fourth consecutive month in June, and at a marked pace," they said.
The slowing down of growth was reflected across the manufacturing sector as a whole.
The rate of new orders slipped three points to 51.7 and domestic orders lagged new orders for export, suggesting that external demand was the driving force behind new orders.
The stocks of finished goods index -- a measure of goods inventories -- increased slightly on previous months but was still in negative territory. A low number for this index is considered positive and it was 42.8 for the month compared to 39.9 in May.
Brian Devine, an analyst with NCB, said that was to be expected. "The increase in the employment index last month had been a surprise and we do not expect net job creation until 2011," he said. "The bottom line is that the momentum continues to be upward with regard to the unemployment rate."
Rossa White, chief economist at Davy Research, said: "That index is languishing below 40, never mind the break-even mark of 50, for the manufacturing survey.
"The PMI surveys mainly reflect what is going on for larger firms. Yet there is little reason to suspect that the trend in stock-building is any better at SMEs, given tight credit conditions."