Further signs of a recovery in Irish and European manufacturing emerged yesterday with the publication of production data for December. The amount of goods being produced by Irish businesses continues to decline - for the fifth month in a row - but the rate of the decline is continuing to slow, according to a survey of manufacturing companies.
A similar but less-pronounced trend was apparent across the euro-zone economies from surveys also published yesterday, but the rate of contraction of manufacturing continues to increase in Britain. The NCB Purchasing Managers' Index (PMI) - compiled from a survey of 285 Irish manufacturing companies - rose from 46.4 in November to 47.7 in December, still below the index value of 50 or more which signals growth. "While the PMI remains below the crucial 50 level, the signs of recovery that emerged in November appear to have strengthened," according to Mr Dermot O'Brien, the chief economist with NCB Stockbrokers.
The main measure used in compiling the index is new orders won during the month. In the critical export sector, orders fell for the eight month in a row, albeit at the slowest rate for six months. Manufacturing output has fallen in tandem with orders and has now been in decline for four straight months, although the rate has eased from a record fall seen in October.
Companies responded by shedding staff for the sixth month in a row. "Job losses were achieved through a combination of natural wastage and forced redundancies. Nevertheless, the rate of job shedding was much less marked than that recorded in November," according to NCB. The other measures used to compile the index are purchasing activity and stock levels. Last month saw further falls in purchasing activity and a fall in the level of raw materials held by manufacturing for the ninth month in a row.
December was the ninth month of contraction in the manufacturing sector across Europe, but the headline Eurozone Purchasing Managers Index edged up for the second month running to 44.1 in December from 43.6 in November and a series low of 42.9 in October.
In Britain, the Chartered Institute of Purchasing and Supply (CIPS) survey recorded its lowest activity reading since January 1999. It was the 10th consecutive month that the index has come in below the critical 50 level.
The December survey showed higher readings in most of the countries covered, notably Italy where the headline index rose to 46.0 from 44.5 in November, and France, where it rose more modestly to 42.8 from 42.1.
However, in Germany, the bloc's dominant economy, manufacturing sank deeper into recession. The German headline index slipped to 43.5 from November's 43.9 as global economic weakness eroded demand.
• Expectations among Irish businesses are at their lowest since the 1992 currency crisis, according to IBEC, the business lobby group. A survey carried out in November asking businesses about the outlook for the three months to the end of February found the majority predicting that the situation would continue to deteriorate. "Production and export expectations had not been as weak since the 1992/93 period when the currency crisis sapped confidence," said Mr David Croughan, the chief economist with IBEC.
