Manufacturing growth shows slight decline

The rate of manufacturing expansion is slowing slightly, according to the latest NCB purchasing managers index.

The index - which provides a barometer of the overall state of manufacturing conditions in the Republic - registered 55.1 in June down from 55.7 in May. Any rate above 50 indicates continuing expansion.

According to Mr Eunan King, senior economist at NCB, the index paints a picture of continuing strong growth in manufacturing. Output growth fell to the lowest level since February of last year but still remained very strong.

Order books continued to improve although the rate of growth has slowed, reflecting a slowdown in orders from the UK, in particular, for the second month in a row. Growth in export orders slowed to the weakest level since June of last year although continuing strong demand from the US, continental Europe and the domestic market offset the impact of weaker UK demand.

According to Mr King, this weakening of demand and the rate of input price inflation remains a concern.

The on-going expansion of the manufacturing sector put increased pressure on suppliers, who were unable to meet rising demand. As a result, delivery times lengthened for the 15th month running. The incidence of delays was the highest in the survey's history.

Suppliers were again able to push through price rises as a result of the strong demand for goods. There was also further upward pressure on manufacturers' costs because of the continuing weak euro and the high price of oil. As a result, many built further safety stocks of goods for which further price rises or shortages were anticipated.

Employment also rose in June with the increase the strongest in five months as one in seven firms took on more staff. "The pick-up in the pace of employment growth is indicative of a high level of confidence in the sector," Mr King added.