The manufacturing sector experienced an improvement in business conditions for the 30th month in a row in February with the seasonally adjusted NCB Purchasing Managers index rising to 52.4 last month.
However this was the lowest figure recorded since last August, as the PMI figure has fallen in each of the last three months. Any reading above 50 represents growth.
NCB said the continued improvement in business conditions was supported by the sustained growth of new business. Despite slipping to a six month low, the rate of new business remains robust. Total new orders increased mainly as a result of domestic demand as a fall in new export orders was recorded for the first time since last May.
The index shows that input cost inflation remained sharp as firms continue to pay higher prices for fuel and raw material inputs. It also showed that higher production levels required manufacturers to step up their purchasing activity in February. Irish companies increased their input buying for the sixth month in a row.
Improvements in output were achieved despite staffing levels falling last month, as firms aimed to reduce their staff costs. The rate of decline in employee numbers was only marginal and followed expansion of the workforce in each of the previous six months.
Dermot O'Brien, Chief Economist with NCB Stockbrokers, said that February's PMI survey was a little disappointing. 'Though manufacturing activity continued to grow, the pace of growth slowed for the third month in a row and employment fell for the first time in seven months,' he said.
'A fall in export orders - the first since May 2005 - appears to have been the main reason for the deterioration, with manufacturers citing increased competition in export markets. Domestic demand remains robust, however, and overall orders continued to grow in February, albeit more modestly than in earlier months,' the added.
