Manufacturing slows for third consecutive month
IRELAND’S MANUFACTURING sector contracted for the third consecutive month in August, according to the NCB Purchasing Managers’ Index (PMI).
Parallel surveys in most other developed economies showed national manufacturing sectors are either slowing down or already in recession.
Yesterday’s PMI surveys from across the world added to fears the global economy is returning to recession.
Ireland’s headline manufacturing PMI, a composite measure of 11 sub-indices, stood at 49.7 in August, below the 50 mark that separates growth from contraction. This suggests the sector contracted slightly.
Ireland’s PMI bucked the international trend in August by improving on July, when the reading was 48.2.
PMIs for the euro area and Britain showed manufacturing falling into recession territory in August.
In Europe, the only major economy to register expansion was Germany, where the manufacturing PMI stood at 50.9 in August. The US survey beat expectations, coming in at 50.6.
Globally, the decline in the manufacturing sector since the spring has been the sharpest since 2008, but the indices remain far above the depths plumbed in late 2008/early 2009.
Of the 11 sub-indices that make up the headline Irish index, seven were in negative territory in August.
The employment sub-index registered surprise growth in August.
Less positively, new orders contracted for the third consecutive month, falling to 47.7 from 47.9 a month earlier.
Export orders proved more resilient than domestic orders, as in other months, with new export orders up to 53.5 in August, from 51.3 in July, the sharpest rise in 11 months.
However, with Ireland’s main export partners facing economic slowdown, figures could edge lower in the coming months.
“We expect Ireland’s main trading partners to slow into the second half of 2011, which will be a drag on Irish exports and growth,” said NCB chief economist Brian Devine.
The input prices sub-index continues to register high levels, as manufacturers are hit with higher oil and raw material prices.
The output prices index fell for the first time in 2011 to date as intense competition prevented manufacturers from passing on high input costs.