Irish manufacturing grew at its slowest rate since November 2004 in August, but employment in the sector grew after a period of decline, according to data published yesterday.
However, the NCB Purchasing Managers' Index (PMI) for the month also found that the rate of expansion in manufacturing during the month was lower than in July.
The index for manufacturing hit 51.1 in August. Any measure above 50 signals an increase in activity on the previous month, while any return below 50 indicates that business has declined.
The July PMI was 51.4, a stronger performance than last month. NCB said yesterday that August's increase was marginal and the weakest performance since November 2004.
However, the employment index grew slightly to 50.9, indicating a small increase in job numbers in the sector. This followed three consecutive months in which employment fell and registered a low of 48.9 in May.
A rise in new orders drove whatever growth there was in the business during August. This element of the index registered 52.1 from 52.8 in July.
The firms surveyed said this was down to promotions, price competition and the introduction of new products.
The index shows that Irish manufacturers are dealing with a squeeze on raw material supplies that is driving up input prices. This element of the PMI hit 57.5 in August, and has been consistently high since for six months.
The businesses surveyed blamed shortages of certain goods for this.
Commenting on the results, NCB chief economist, Dermot O'Brien, described the boost to manufacturing as modest. "However, a notable positive development in the August survey was that employment grew after three months of small declines," he said.
A similar survey of all the 12 euro-zone countries dampened hopes of growth in the region. The European index for August came in at 50.4, compared with 50.8 in July. It was well below economists' forecasts of 51.
France recorded strong growth at 52.1, but Germany had its weakest performance for over two years with a showing of 48.7. Italy was stagnant, reacting to the benchmark point of 50. Analysts believe the poor out turn will help keep interest rates low for the next three months.
NTC Research produces the euro zone index, including the Irish version.
