Global contagion hits Ireland as manufacturing pace slows
The pace of growth in new manufacturing orders here has slackened to its lowest level since late 2013, prompting fears that the global manufacturing slump has finally reached Ireland.
The overall pace of growth in the sector in Ireland was the weakest in two years last month, while in the UK, it slowed to a 34-month low.
In the Eurozone, manufacturing expanded at the slowest pace for a year, with France and Germany, the two biggest economies, hovering close to stagnation. Greece has slipped back into contraction territory.
In Ireland, manufacturing growth eased in February as new orders rose at the weakest pace since the end of 2013, according to the latest Purchasing Managers' Index for the sector.
Philip O'Sullivan, economist with specialist bank Investec, said the report suggests "global headwinds may be starting to weigh on the manufacturing sector here".
"When the Investec PMIs were released a month ago, we cautioned that Ireland will not be immune to any slowdown in international trade," Mr O'Sullivan said. "We suspect, therefore, that some of the index changes are connected to the more troubled global backdrop. With that being said, on balance, we expect that the sector will record another year of growth in 2016."
The seasonally adjusted Investec PMI fell to 52.9 in February, down from 54.3 in January. While still in growth mode, it was the weakest pace in two years.
The rise in new orders was the slowest since November 2013, with orders mostly coming from the UK and US. But growth in new export orders also slowed. Backlogs of work decreased for the second month running, and at a sharp pace that was the fastest since February of 2014.
That means factories are getting through their workloads and less new business is coming onstream.
Manufacturers had their weakest month in nearly three years in February.
With growing uncertainty about the health of the global economy, and the looming British EU membership referendum, the Markit/CIPS manufacturing PMI fell sharply to 50.8, lower than had been expected.
The survey showed demand at home slowed while export orders fell, a double whammy for a sector which accounts for about 10pc of Britain's economic output. In the Eurozone, manufacturing activity expanded at its weakest pace for a year last month as deep price discounting failed to put a floor under slowing order growth.
It comes just little more than a week before the next policy meeting of the European Central Bank. Markit's manufacturing PMI for the Eurozone dropped to 51.2 from January's 52.3.
"Concerns are growing that the region is facing yet another year of sluggish growth in 2016, or even another downturn," said Markit's economist Chris Williamson. "Lacklustre domestic demand is being compounded by a worsening global picture." (Additional reporting Reuters)