Strong month for manufacturing

The performance of the manufacturing sector improved in June mainly due to an increase in new orders, the latest NCB survey indicates.

The purchasing managers index edged up to 50.7 in June from 50.3 in the previous month. This indicator measures the economic health of manufacturing industry.

The rise in new orders in June was the 22nd increase in succession and new orders were much stronger than in May. Firms reported that demand remained firm and many linked the improvement in orders to the introduction of new products.

The survey said a rise in the number of new export orders was recorded for the first time in four months. Manufacturers said this was linked to the success of new product ranges in foreign markets and a willingness to "tailor output to suit the needs of clients based abroad". Manufacturers said improved orders had prompted them to expand production volumes again in June. However the rate of output growth eased for the second month running and was only slight.

Employment levels in the manufacturing sector showed a marginal decline in June. Net staff losses were mainly put down to the non-replacement of staff who decided to depart.

Chief economist at NCB, Dermot O'Brien, said there was only a marginal improvement in overall manufacturing activity in June, although the signs for the future were encouraging. "In particular new orders rose quite sharply and export orders expanded for the first time in four months. While employment declined again, the extent of the slippage was minor and less than in May. In addition inflationary pressures eased, with the pace of increase in output prices the lowest in 14 months".

Meanwhile US manufacturing grew more quickly in June as new orders jumped despite soaring energy prices, according to a survey published yesterday. The Institute for Supply Management said its index of national factory activity climbed to 53.8 in June from 51.4 in May, well above economists' forecasts. The report bolstered the dollar and sapped some strength from safe-haven government debt as investors bet a strong economy would allow the Federal Reserve to continue raising interest rates incrementally.