Irish manufacturing shrinks again for third month in a row
IRISH manufacturing shrank for the third month in a row in May but the pace of decline was the slowest seen since the sector contracted for the first time in over a year in March, a survey showed today.
Set to exit its EU/IMF bailout on schedule at the end of 2013, Ireland has seen its economy expand for the last two years, but it contracted in the third quarter of 2012 and was flat in the fourth as weak external demand weighed on exports.
The government is confident it can eek out gross domestic product (GDP) growth of 1.3 percent this year but manufacturing data suggests the sector will begin to weigh on those prospects when GDP figures for the first quarter of the year are released later this month
The Investec Manufacturing Purchasing Managers' Index fell to 49.7 in May versus a 19-month low of 48.0 in April, below the 50 line dividing growth from contraction and showing the slowdown continued into the second quarter.
"The headline PMI reading indicates that activity may be beginning to stabilise, however, forward-looking components suggest that a return to the pace of growth recorded during 2012 may be some months away," Investec Ireland chief economist Philip O'Sullivan said.
"Last month we said that, on the evidence of the April report, 'Q2 has gotten off to an uninspiring start for the Irish manufacturing sector'. This release does little to alter that narrative, although we are relieved to see that the pace of the recent decline may have been arrested."
The key sub-indices measuring new orders and new export orders also declined at a slower pace in May, although they still recorded sub-50 readings. New orders stood at 49.1 compared to 46.9 a month earlier.
Manufacturing accounts for about a quarter of Ireland's gross domestic product, according to World Bank figures.
With weakened demand from abroad hitting goods exports particularly hard, Ireland has become increasingly reliant on its services industry and PMI data for that sector hit a three month high in April.