Growth in the Irish manufacturing sector slowed for the first time in seven months in November as the expansion in new orders and output weakened, a survey showed today.
Ireland pulled out of recession in the second quarter and though growth remains anaemic, indicators have pointed to a pick-up next year after the country exits the bailout programme later this month.
The Investec Manufacturing Purchasing Managers' Index for Ireland fell to 52.4 in November from 54.9 in October, remaining above the 50 line dividing growth from contraction.
It was the sixth successive month of expansion following a three-month dip to the end of May.
“While most components, when benchmarked against the buoyant October outturn, point to a slower pace of expansion in November, the underlying narrative remains intact,” Investec Ireland chief economist Philip O’Sullivan said.
“The manufacturing sector in Ireland continues to grow, and we see this trend extending in 2014 on the back of an improving international and domestic economic backdrop.”
While the pace of new export orders fell to 54.1 from 56.6, five of every six respondents either increased or maintained their level of new export orders, gains chiefly attributed to the US and British markets, the survey’s authors said.
Euro zone
Buoyant demand for manufactured goods drove euro zone factory activity to accelerate at its fastest pace in over two years last month and allowed firms to build up a small backlog of work.
But that growth was still weak and Markit said evidence of a renewed downturn in France and Spain - as well as firms cutting staff - was disappointing.
“The November manufacturing PMI surveys bring good news on the whole, but suggest there’s still a lot to worry about in terms of the health of the euro zone economy. The big concern is France,” said Chris Williamson, chief economist at Markit.
Markit’s Eurozone Manufacturing PMI rose to 51.6 last month from October’s 51.3, just pipping an earlier flash reading of 51.5. An index measuring output nudged up to 53.1 from 52.9.
November was the fifth month the index was above the 50 level that denotes growth, and the reading was the highest since June 2011.
“More southerly countries continue to disappoint, though, especially France and Spain, where renewed downturns are evident,” Mr Williamson said.
France’s PMI plummeted to a five-month low of 48.4 from 49.1, chalking up its 21st month below 50, while Spain’s sank back below the break-even mark after spending the last three months in growth territory.
Data from Germany, Europe’s biggest economy, showed factories there had their best month since mid-2011. Italian figures showed manufacturing there also picked up speed.
Demand from abroad for goods rose at the fastest pace since May 2011, with the export orders subindex bouncing to 54.0 from October’s 53.1. More total new orders also came in than last month.
This allowed firms to rack up a surfeit of orders faster than anytime since May 2011, but they still reduced headcount for the 22nd month.
“The other major concern is that employment continues to fall as companies seek to become leaner and more competitive. Any substantial improvement to the region’s record unemployment situation still seems frustratingly far off,” Mr Williamson said.
However, European factories did increase the price of their goods for the third month running. Flash inflation data on Friday showed prices across the 17-nation bloc rose 0.9 per cent last month, slightly faster than expected but well below the European Central Bank’s 2 per cent target ceiling.
Manufacturing in central Europe picked up in November, pointing to stronger economic growth in the region in the fourth quarter thanks to rising demand from Germany and a gradual revival in domestic consumption.
The PMI raised expectations that the Czech economy, which has lagged the region, could return to growth this quarter, helped by central bank intervention to weaken the crown.
Data for the Czech Republic and Poland beat forecasts and factory activity also accelerated in Hungary.
UK and US
British manufacturing grew at its strongest pace in almost three years in November and employment in the sector jumped, adding to signs the country’s economic upturn is gaining momentum. The PMI jumped to 58.4 in November from an upwardly revised 56.5 in October. The index was at its highest since February 2011.
The PMI report for the US showed manufacturing growth rebounded from a one-year low in November, while factory output grew at its fastest pace in 20 months.
The US PMI rose to 54.7 from 51.8 in October, which had been a one-year low arising as a result of the 16-day partial US government shutdown.
New orders rose at the fastest pace since January, with a final reading of 56.2 beating both a preliminary November figure of 54.9 and the final reading of 52.7 in October.
“Large companies are leading the upturn, having escaped the impact of the shutdown, with output and new orders growth rending higher in recent months,” Mr Williamson said.
Still, the employment subindex fell below October’s reading, though it was higher than the preliminary November level.
Reuters
