Further modest growth in output

Irish manufacturing recorded further modest growth in April, with the pace accelerating for the second successive month, according to the latest NCB purchasing managers' index (PMI). But, despite hitting a 13-month high of 51.4 in April - up from 50.5 in March - the index remained only slightly above the critical no change mark of 50 that divides contraction and expansion.

"The report indicates a consolidation in the growth of manufacturing in April. The forward-looking indicators such as output moved up further, while the orders series consolidated.

Of the five components used in the calculation of the index, the output and new orders indices - which tend to react more quickly to changes in the economy - had the strongest influence on the headline index last month. Order books rose for the fourth consecutive month, with rising demand linked to improved business conditions in Ireland, as well as increased sales abroad, in particular to Britain.

"Nevertheless, the rate of growth of new orders remained only modest and was marginally weaker than that seen in March," NCB warned.

Production levels were also up for the fourth successive month, and at the fastest rate since July 2001, as firms generally responded to fuller order books by raising production levels further.

Despite rising input requirements, the volume of inputs purchased fell for the 10th month in a row in April. Most firms reported that purchasing activity had been cut as part of deliberate destocking policies aimed at reducing inventory levels but the rate of decline of purchasing activity remained only slight and significantly slower that the survey record rate of decline seen last October.

The decline in overall purchasing activity also reflected a marked rise in input costs during the month. Average input prices also rose for the first time in nine months in April, with the rate of input price inflation the highest since March 2001.

Rising oil prices and shortages of certain raw materials were widely cited by panel firms as the two main factors behind the price rises.

Suppliers' delivery times lengthened for the first time in almost a year last month, despite weaker demand for inputs. Some firms linked lengthening delivery times to bottlenecks in the supply chain for certain manufacturing materials. But the rate of lengthening of lead-times was only marginal and markedly slower than the incidence in delivery delays seen during the second half of 1999 and throughout 2000, NCB said.

Overall manufacturing employment fell for the 10th month running in April. But the rate of decline of employment was only modest and the slowest in the current downturn in staff recruitment, NCB said.