2nd June 2010: Purchasing Manager Index Increase

Tangible evidence that the economy is leaving the recession behind iscontained in the latestfigures on manufacturing.

The NCB Purchasing Managers Index shows the employment sub-index breaching the 50 mark for the first time since November 2007.

Any figure above 50 indicates growth. This was the fourth month in a row that the PMI recorded an increase, up from 53.4 in April to 54.1 last month and it was the best since September 2007, NCB said

Forecasters had warned this recovery will be jobless, but the tentative signs of jobs being added for the first in two-and-a-half years demonstrates that economic recovery is happening after the worst recession ever.

The boost in the employment index means more firms increased job numbers than cut them, said NCB economist Brian Devine.

Just over 17% of firms increased their head count last month, while 11.3% cut numbers, he said. The PMI rose in May on the back of increased output, new orders and employment, he said.

While manufacturing sector employment is far smaller than that in services, this result "is a really positive development", he added.

Increasing workloads was responsible for the first instance of job creation since November 2007, but the rise was modest as firms continue to grapple to improve efficiencies.

Production increased for the third month in a row due to better order books, while the rate of new orders eased from the levels achieved in April, according to NCB

In line with economic forecasts the PMI confirmed new export business was increasing at a much faster pace as firms reported new business growth from both the key US market, as well as from Asia. Raw material costs rose sharply last month, extending the run of increases over five months.

The price of steel, oil and aluminium all rose. And as a result, manufacturers increased their output prices for the first time since November 2008, said NCB.

 

Source –examiner.ie