Manufacturing output falls 5.2% in first quarter

MANUFACTURING OUTPUT declined by 5.2 per cent in the first quarter of the year, once seasonal factors are accounted for. The fall was the largest quarter-on-quarter contraction in four years and the second consecutive such decline.

Manufacturing output during the three-month period was at its lowest level since the end of 2009.

The figures, published yesterday by the Central Statistics Office, show weakness across almost all of the manufacturing sector, with declines in output registered in both the high-tech, mostly foreign-owned “modern” sector and in the “traditional” lower-tech sector.

This weakness is likely to reflect the downturn in major export markets as the overwhelming majority of goods manufactured in Ireland are shipped abroad.

There is also tentative evidence that a feared structural decline in the pharmaceutical sector, which is Ireland’s largest manufacturing industry by value and output, has begun. The change relates to the expiration of patents on leading branded drugs at the end of last year.

Output in chemical and pharmaceuticals declined sharply in the first quarter after a smaller contraction in the final quarter of last year. Output, however, remains close to the record highs that have been recorded since the sector massively increased output in 2009 and early 2010.

The computer hardware sector was one of the few large industries to increase output on the quarter, although the increase was marginal. Since 2008, the sector’s output has halved in size as manufacturing capacity has moved to lower-wage economies.

The “traditional” sectors tend to be more labour-intensive and more focused on the Irish and British markets.

As the chart shows, the traditional sector suffered a second consecutive contraction in the first three months of the year.

The sector was badly affected by the global downturn in 2008-09 and its recovery since then has been feeble.

Output in the first quarter of 2012 was not only below the low point registered during the global recession, but has fallen to levels last registered 15 years ago.

The food and beverage sector suffered an unusually large fall in output between the final quarter of 2011 and the first quarter of 2012. When adjusted for seasonal factors, a quarter-on-quarter contraction of 7.3 per cent was recorded. Quarterly food and beverage output fell to its lowest level in nine years.