Business

Manufacturing improves but employment down

Output rises at fastest rate for a year despite supply-chain pressure, latest indicator shows

A key weak point from the latest survey results was a renewed fall in manufacturing employment, the third contraction in four months.

Mon Mar 2 2020 - 09:23

Manufacturing conditions continued to improve in the Republic last month with output and new orders rising at faster rates than in January.

The AIB Manufacturing Purchasing Managers' Index (PMI) stood at 51.2 in February, only slightly below January's reading of 51.4, and well above the levels seen in the second half of 2019.

Manufacturing output rose at the fastest rate for a year last month, despite the impact of storms and reports of disruption to supply chains from China’s coronavirus outbreak. Production was driven higher by a fourth rise in new orders in five months.

AIB said there was evidence of pressure on supply chains due to disruption caused by the coronavirus outbreak in China. Reflecting this, stocks of inputs declined at their fastest rate since January 2016 last month. Manufacturers also reduced the total number of inputs ordered during the month compared with January.

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Further contraction

A key weak point from the latest survey results was a renewed fall in manufacturing employment, the third contraction in four months.

"Overall, despite significant headwinds in February, Irish manufacturing managed to maintain its positive start to 2020 the PMI data show, though, that the sector is facing a number of challenges and firms are cautious as evidenced, by falls in employment, inventories and sentiment," said Oliver Mangan, chief economist at AIB.

The manufacturing downturn in the euro zone eased last month despite the coronavirus outbreak and its impact on supply chains, in an encouraging sign for the European Central Bank as it tries to stoke growth, a separate survey showed on Monday.

IHS Markit’s Manufacturing Purchasing Managers’ Index rose to 49.2 in February from January’s 47.9, pipping a preliminary estimate of 49.1 and chalking up its highest reading in a year.

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