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NCB Purchasing Managers’ Manufacturing  Index - July 1st 2004
First indication of Irish business conditions each month

Manufacturing business conditions strengthened again in June, although the rate of improvement eased slightly

"Growth in the manufacturing sector was maintained in June though at a slightly less rapid rate than in the previous few months. Export orders to the US , Asia and the UK remained robust and employment growth accelerated marginally. Overall, the survey outlines the continuation of a satisfactory pace of growth in the sector."
Dermot O’Brien – Chief Economist at NCB

Purchasing managers reported a further marked improvement in business conditions in the Irish manufacturing sector in June, with output, new orders and employment all continuing to rise. The seasonally adjusted NCB Purchasing Managers’ Index® (PMI®) – an indicator designed to provide a single-figure measure of the economic health of the manufacturing industry – registered 53.7, remaining above the critical 50.0 no-change mark for the tenth consecutive month. However, a decline in the PMI from 54.5 in May, indicated that the rate of improvement in business conditions was not as strong as that recorded a month earlier.

The survey covers all private sector services in Ireland, excluding retail and wholesale, and provides timely data on an area of the economy that is not well covered by official data. The data are derived from questionnaires sent to a panel of around 600 Irish private services companies that have agreed to supply regular information on trends in their activity levels. Monthly data have been collected since May 2000.

Activity and demand The volume of new business placed with Irish manufacturers rose for the tenth month in a row in June. The rate of growth remained marked, but was weaker than that recorded in May. This, in part, reflected an easing in the rate of growth of new export orders. Nevertheless, international orders rose solidly during the month, with the US, Asia and the UK noted by panel firms as the principal export destinations. Ongoing growth of incoming new orders encouraged manufacturers to raise production levels again in June. However, in line with the trend recorded for new orders, the rate of growth of output was less marked than a month earlier.  Production levels were increased sufficiently to allow work to continue on existing contracts and, as a result, the volume of outstanding work declined for the third month running.
Input and output prices Shortages of raw materials on international markets (in particular steel) increased suppliers’ pricing power, in turn having an inflationary impact on costs. This, along with rising fuel prices, pushed average input costs up sharply again in June. However, the rate of input cost inflation eased markedly compared to May. With input costs surging, panel firms again raised their prices charged. However, strong competition ensured that the rate of output price inflation remained well below that of costs. Stocks In order to meet higher production levels, panelfirms reported increased purchasing of raw materials and semi-manufactured goods in June. Nevertheless, inventories of purchases were eroded for a third successive month, suggesting that current of buying was carried out on a just-in-time basis, largely to control stock-holdingcosts. Employment June’s data pointed to a modest expansion of Irish manufacturing employment, as firms recruited additional staff to meet rising workloads. In a number of cases, productivity gains allowed firms to raise production at a far greater pace than employment.
Previous Reports Available Purchasing Managers Manufacturing Index June 1st 2004 >>> Purchasing Managers Manufacturing Index May 4th 2004 >>> Purchasing Managers Manufacturing Index April 1st 2004 >>>

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NCB
The NCB Group is a leading financial services company based in Dublin with a wide domestic and international client base. Its main activities are in Stockbroking (private client and institutional), Bonds, Moneybroking, Corporate Finance, Venture Capital Investment and International Funds Listing.

NTC Research
NTC is one of the world’s largest specialist providers of business research and information, operating business surveys on behalf of blue chip clients. Current research includes continuous surveys providing original data on economic conditions in the UK, Germany, France, Italy, Spain, Netherlands, Austria, Ireland, Greece, Russia, Poland, the Czech Republic Hong Kong and Japan. NTC surveys are widely used by governments, businesses and the financial markets.

NTC, Farm Road, Henley-on-Thames, Oxon, RG9 1EJ. Tel: +44 1491 418700. Fax:+44 1491 571188. www.ntc-research.com