Industrial production drops but pace of hiring picks up for April
INDUSTRIAL production fell in April for the first time in three months, as the nascent economic recovery threatens to run out of steam.
The weakening situation in Ireland and across Europe is in contrast to a surprise boost to the US economy, where manufacturing unexpectedly expanded in April at the fastest pace in 10 months.
The NCB Stockbrokers purchasing managers index (PMI) measures activity in the private sector on a scale either side of 50 -- where a value over 50 shows growth and a value under 50 shows the economy declined. The index is based on a survey of managers.
The latest PMI for the manufacturing sector shows the faltering recovery has almost ground to a halt. Overall output fell, with the index staying just above the 50 mark at 50.1 thanks to a rise in new orders and new export orders -- triggering a welcome rise in the numbers at work.
The manufacturing PMI is down from 51.5 in March and the biggest falls are in demand for intermediate and capital goods -- products used in manufacturing.
While the headline figures show the economy remains fragile, the news on the jobs front is far more positive.
Employment at manufacturing firms was up for the second month in a row in April, after three previous months of declines.
The pace of hiring picked up last month -- with twice as many companies hiring staff as cutting numbers. It comes as a new report commissioned by the drinks industry says exports of Irish drink are worth more than €1bn a year to the economy. (See picture below)
The report says beverage exports have the greatest impact on the domestic economy of any product because of the high level of Irish ingredients used in the manufacturing process.
Perhaps the biggest surprise yesterday was the lift in manufacturing in the US, driven by gains in orders and production.
The US Institute for Supply Management's factory equivalent of our PMIs rose to 54.8pc last month.
That is better than even the most optimistic forecast in a Bloomberg News survey of economists.
Stronger demand for cars in particular is bolstering American manufacturing.
In the US, employment is also on the up with new hires at a 10-month high. Closer to home, manufacturing in the UK fell faster than forecast in April as exports from there declined at the fastest pace since 2009.
The news comes after figures showed the UK was in its first "double-dip" recession since the 1970s.
Inside the euro area, the traditional May Day holiday means PMI data was only published for Ireland and the Netherlands yesterday, with figures for most of the eurozone due out today.
The Netherlands suffered a decline in output in April -- with new orders as well as overall output falling.
The Netherlands has been sucked into the euro crisis in recent weeks, with the collapse of its coalition government after parties failed to agree an austerity programme.
In China, manufacturing expanded for the fifth straight month in April, news that eases pressure on policy-makers to open the taps on credit in the world's second-largest economy.
The Purchasing Managers' Index rose to 53.3 from 53.1 in March, China's statistics bureau and logistics federation said yesterday, the highest reading in a year. (Additional reporting Bloomberg)