Monday 20 November 2017

Jobs boost as manufacturing grows at fastest rate in year

Ireland's manufacturing sector has grown regularly for the past four months after a prolonged period of contraction. Photo: Thinkstock
Ireland's manufacturing sector has grown regularly for the past four months after a prolonged period of contraction. Photo: Thinkstock
Thomas Molloy

Thomas Molloy

But hopes of recovery in Irish exports are overshadowed by growing concerns over global economy

THE country's manufacturing sector grew at its fastest rate in more than a year in June as firms took on more workers, fuelling hope that Irish exports are recovering from the crisis in the eurozone and the domestic economy.

The rosy picture was tarnished by significant declines in most other parts of the globe.

Ireland's manufacturing sector has grown regularly for the past four months after a prolonged period of contraction. according to the latest survey. The NCB Purchasing Managers' Index climbed to 53.1 in June from 51.2 in May, accelerating its rise above the 50 line that separates growth from contraction.

The employment sub index grew for the fourth month in a row to 55.9 in June. That's the sharpest increase since December 1999, when the index started," said Brian Devine, chief economist at NCB Stockbrokers. "These are a healthy set of numbers."

NCB said that the job creation was mainly linked to rising production. New orders and new exports also performed well last month.

There was further good news for manufacturers as input costs fell for the first time in more than two years as commodity prices sank. The price of goods sold by companies didn't change -- the first time in 10 months that there had not been a decline.

Weakness

The survey ''bodes well for the Irish economy',' Mr Devine said.

Stocks of purchases continued to decrease as firms remained reluctant to build up inventories. However, strong growth of input buying led the rate of depletion to slow to a marginal pace that was the weakest since February 2008.

The growth of the manufacturing sector here was in stark contrast to the rest of the euro area, which saw manufacturing output contract for an 11th straight month as Europe's debt crisis sapped demand across the continent. The gauge for the eurozone held at 45.1 in June, London-based Markit Economics said in a final estimate.

Europe's economy is showing increasing signs of weakness after stalling in the first quarter as the worsening fiscal crisis erodes the confidence of executives and consumers.

"Producers' input costs are now falling at the fastest rate for nearly three years, which should help boost profitability and feed through to lower inflation," Markit's chief economist, Chris Williamson, said in yesterday's report. "However, their biggest fear at the moment is slumping demand rather than rising prices, with demand in home markets and further afield being hit by heightened uncertainty regarding the economic outlook as the region's economic crisis rolls on."

The US manufacturing sector grew in June at its most sluggish rate in 18 months as the pace of output, hiring and new orders all slowed, an industry survey showed.

The final index stood at 52.5 in June, below both a preliminary estimate of 52.9 and May's reading of 54. June marked the lowest showing since December, 2010. Another survey by the Institute for Supply Management suggested later that the US economy is in fact contracting.

US factories were hurt by weak European demand for US goods. Mr Williamson said that should persist "for some time to come" as Europe struggles with austerity budgets and sluggish growth.

Figures from further afield showed that a factory slump in Asia's two biggest exporters, China and Japan, deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.

PMI reports on major exporters South Korea and Taiwan also indicated new orders were falling.

Irish Independent

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