Strong growth for manufacturing sector in May
The manufacturing sector of the economy recorded its strongest growth for 16 months in May, buoyed by a rising volume of new orders. The monthly Purchasing Managers' Index (PMI) compiled by NCB Stockbrokers showed a seasonally adjusted level of 52.3 in May, above the critical no-change mark of 50.0 for the fourth successive month and up on the April figure of 51.4.
The upturn in manufacturing activity was driven by the strongest rate of growth since January 2001 in new orders placed with firms. These firms have linked their fuller order books to improving business conditions in the Irish economy and abroad and to the availability of new products.
The export component of total order books showed foreign demand for Irish manufactured goods rose for the fifth successive month. But the rate of export growth slowed to its weakest level since February and the May index level of 51.5 was down from the 53.1 peak achieved in April. Of the firms reporting fuller export order books, the majority attributed the increase to stronger demand in European and US markets.
Commenting on the latest figures, NCB senior economist Mr Eunan King said evidence of a significant rebound in manufacturing activity was now emerging in official manufacturing and output data."This recovery has been signalled ahead of time by the NCB PMI and the latest PMI report shows that the revival in manufacturing activity continues to strengthen. The May survey shows new orders at their highest since January 2001 and output higher than at any time since July 2000. Perhaps most significantly, after 10 months of decline, manufacturing employment has begun to grow again", he said.
Manufacturing employment rose marginally in May, up for the first time since June 2001, according to the survey. Firms surveyed said they increased staffing levels to expand capacity to meet higher production schedules. In May, the Employment Index figure was 50.2, up from 49.7 in April. While the increase was marginal, it contrasted with a record rate of job shedding since last November.
In line with the growth in order books, production levels at manufacturing firms increased for the fifth successive month. The rate of output growth continued to accelerate to reach the fastest monthly growth rate since July 2000. At 55.6, the Output Index for May compared with 53.0 for April and 51.8 for March. The latest index showed a marginal increase in the volume of raw materials purchased for the first time since last June while overall inventories fell for the 14th successive month and at the second-fastest rate since August 2001.
The Wholesale Price Index for April released yesterday showed an 0.8 per cent rise in factory gate prices for the month, giving a year-on-year rise of 1 per cent. The index for export sales rose by 0.8 per cent while the index for home sales rose by 0.8 per cent. Increases in printing and printing services (+2.1 per cent), mineral oil refining (figures not disclosed for reasons of confidentiality), other food products (+0.9 per cent) and pharmaceuticals and chemical products (+0.8 per cent) contributed to the monthly price rise.