Industrial production falls in November

Figures released by the CSO this morning show that the rate of industrial production - a key indicator of manufacturing activity - declined in November from the previous month, but is still significantly higher than the same period last year.

Industrial production fell by 1.9 per cent in November to 105.6, down from 107.7 in October.

In terms of quarterly trends, the volume of industrial production for manufacturing industries for the three month period September to November 2010 was 3.8 per cent lower than in the preceding three month period.

However, annual comparisons paint a more positive picture, with industrial production up 15.7 per cent on the year.

Pharmaceutical products saw the biggest increase with a 34.6 per cent jump in output in the year, though computer, electronic and optical products declined by 18 per cent.

The "Modern" Sector, comprising a number of high-technology and chemical sectors, showed an annual increase in production for November 2010 of 21.7 per cent , while the 'traditional' sector showed a more modest increase of 3.2 per cent.

This is the second consecutive monthly decline in industrial production.

Alan McQuaid of Bloxham Stockbrokers said that while the increase of activity in the traditional sector was small, it is the seventh consecutive monthly rise following two and a half years or so of constant declines.

"Even allowing for some adverse exchange-rate movements since the beginning of July, it does now look like the "indigenous" sector has become more competitive and found a solid footing, which augurs well for the months ahead" he said.

He added that external demand will be key to how Irish manufacturers perform in the coming months.

"Any weakening of the global economy will clearly have an adverse impact on output/exports. That said, Irish manufacturers are benefiting from improved competitiveness, with the lowering of the cost base arising from the decline in wages and prices across the economy expected to place Ireland in a very favourable position to benefit from the eventual recovery in trade flows."

Davy Stockbrokers described the data as "a mixed picture." While noting the 15.7 per cent year-on-year increase, it points out that the annual rate of growth reflects the sharp monthly decline that occurred between October and November last year, so that the baseline for the annual comparison fell sharply.

"It is hard to discern a clear trend in the industrial production data given recent month-on-month declines in output" said Davy's Conall Mac Coille. "But overall we expect the annual rate of growth to remain robust in the next few months given the recent positive data flow on global activity, particularly in the industrial sector."