Fall in export orders slows industry

Irish manufacturing has grown at is slowest pace in 15 months, due primarily to a fall in export orders. Euro-zone manufacturing growth also eased slightly against expectations last month, but the new export orders index rose to a four-month high.

The NCB Purchasing Managers' Index, which has eased in four out of the past five months, recorded 51.6 in November, down from 53.2 in October. A reading over 50 indicates that the manufacturing economy is growing.

"Growth in manufacturing activity continued to decelerate in November, with the pace of growth at its slowest since October 2005. A fall in export orders in the month is likely to have been an important cause of the deterioration, given the external orientation of Irish manufacturing. For the moment, however, employment in the sector continues to expand," said Dermot O'Brien, chief economist at NCB Stockbrokers.

Output, new orders and employment all continued to rise, but at slower rates than in the previous month, while delivery times lengthened at a marked rate, NCB said.

Production continued to rise at Irish manufacturers in November, with firms linking growth to higher new order levels and the introduction of new product lines. But in line with the trend in new orders, the rate of growth of output was the weakest for 15 months.

Greater production requirements led to a solid rise in purchasing activity and a modest decline in purchased goods stocks. Firms also mentioned that supplier delivery delays contributed to decreased stock holdings.

Employment rose marginally in November and employee numbers have now risen in each month since April.

Backlogs of work at Irish manufacturing firms declined for the fifth consecutive month in November, which a number of firms linked to productivity improvements. However, stocks of finished goods continued to decline and post-production inventories have now diminished each month since November 2004. Firms linked the latest decline to higher new order levels.

Input prices paid by Irish manufacturers rose at a strong rate in November, with firms reporting increased prices for energy, plastics and raw materials. However, the rate of cost inflation eased and was the weakest for the year.

Firms' efforts to protect margins from higher input costs underpinned a robust rise in prices charged.