Industrial production stagnates in May

Irish industry is struggling again after a promising start to the year according to official figures which show industrial production…

Irish industry is struggling again after a promising start to the year according to official figures which show industrial production fell by 0.1 per cent in the three months to May.

The production figures from the Central Statistics Office shows that production has slowed in the chemicals and machinery sectors since the beginning of the year raising concerns about the strength of the global recovery.

The slowdown in the production of chemicals has been particularly abrupt. Chemical production which was ahead by almost 20 per cent year-on-year in December has now fallen back to 2.2 per cent ahead of the same period last year.

The stagnant performance is confirmed by the latest figures from the IBEC/ESRI Monthly Industrial Survey, which shows only a modest upturn in expectations and order books remaining weak.

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Economists warned that if the slowdown continues more job losses are likely in

the manufacturing sector, which has lost about 12,000 jobs per annum over the past two years.

"Weak industrial production figures means further job losses," said Mr Aebhric Mc Gibney, IBEC's senior economist, "Many firms have held onto people in the downturn, so even those businesses that are beginning to see growth again will only hire additional workers once the slack in the existing workforce has been up."

Mr Dermot O'Leary of Goodbody stockbrokers said the broad nature of the weakness in industrial production is somewhat of a surprise, however the data of the past two months gives encouragement that the downward trend is now at an end.

"Export industries should benefit from the continued global economic expansion in the remainder of the year," Mr O'Leary added.