Decline in manufacturing eases slightly, notes report

THE DECLINE in Ireland’s manufacturing sector eased slightly last month although new orders, employment and output all dropped sharply, according to a new report.

The NCB Purchasing Managers Index (PMI) survey, which measures Irish manufacturing activity, also found purchasing activity fell sharply in March in response to declining new orders.

The headline figure rose to 35.1 in March from a record low of 33.2 in February.

The March reading was the second steepest decline in manufacturing activity since the survey began in May 1998. The sector has declined for 16 consecutive months. A reading below 50 indicates contraction and the lower the number the steeper the pace of decline.

Brian Devine, economist at NCB Stockbrokers, said the data indicated a slowing in the rate of decline and unlike previous small rises – such as in January – this was matched by minor increases in other countries.

“The weakness in manufacturing was evident in the fourth quarter 2008 national accounts which showed that industry was down 7.9 per cent year-on-year and by a large 10.2 per cent quarter-on-quarter,” he said.

The employment component of the survey reported its second steepest fall of 33.3 in March compared with the lowest ever figure of 30.5 in the previous month.

Irish manufacturers have reduced jobs for 16 consecutive months in response to lower orders as they seek to reduce costs by cutting staff.

“The pace of decline remained substantial as firms adapted to lower production requirements and attempted to reduce costs,” according to Markit, which compiles the survey.

New export orders also declined at the second fastest pace in the survey’s history last month, just behind February’s record low.

New business from Europe declined in March with firms also specifically mentioning a decline in orders from the UK, central and eastern Europe.

In the US, manufacturing contracted for a 14th straight month in March as factories cut production amid the economic downturn.

Across the euro zone, the pace of decline in factory activity eased slightly in March, helped by signs of stabilisation at low levels in France and Germany.