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News : Irish Economy Last Updated: Jan 9, 2015 - 10:55 AM


Irish local + overseas contract manufacturing strong in December
By Michael Hennigan, Finfacts founder and editor
Jan 2, 2015 - 6:37 AM

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The end of year manufacturing PMI (purchasing managers' index) survey showed continued strength in December with demand reported "to have strengthened both at home and abroad, with the increase in new export sales the best seen since March 2010. Manufacturers responded by raising their staffing levels to the greatest degree in 15 years."

However, official data published last November show that jobs in industry grew by 3,000 in Q3, but they were down 3,000 in the 12 months to September 2014.

Also in November, the Fiscal Advisory Council highlighted that contract manufacturing overseas, which is booked in Ireland for tax avoidance purposes, accounted for 43% of the rise in GDP (gross domestic product) in the first half of 2014.

Irish industrial production rose by 38.5%  in the 12 months to October 2014 - even the Chinese couldn't manage this type of rise and the reality is that overseas manufacturing by for example Dell's Polish output is booked in Ireland. Contract manufacturing by pharmaceutical firms has risen sharply this year in 2014.

43% of rise in H1 2014 GDP from manufacturing overseas - Irish Fiscal Council

Irish Economy: Bruton says 80,000 jobs added since Q4 2011- 36% are farmers - see category table here. It shows that 62% of the jobs added since Q1 2011 were in agriculture and tourism activities. The CSO category split may not be reliable also.

The idiot/ eejit's guide to distorted Irish national economic data

Markit says that the seasonally adjusted Investec PMI – an indicator designed to provide a single-figure measure of the health of the manufacturing industry – improved to a four-month high of 56.9 in December, up from 56.2 in November. The index has now registered above the 50.0 no-change mark that separates growth from contraction for 19 months in succession.

The London-based firm said that supporting the PMI in December were concurrently stronger gains in output and new orders. Production growth was the best since August, while the rate of increase in new orders was the strongest for three months. There were reports from panellists of improved demand from both at home and abroad. New export orders rose to the greatest degree since March 2010, with companies reporting success in securing new business from Asia, the Middle East and the UK.

With output rising at a stronger pace than new work, Irish manufacturers were able to successfully keep on top of workloads. Backlogs of work declined for the fifth month in a row, with the latest reduction the sharpest seen since September. Utilisation of stock was also reported, with inventories of finished goods falling for the first time in three months.

Capacity was also increased during December from a labour perspective, as employment levels in the Irish manufacturing sector increased at a substantial pace. The rate of expansion was actually the strongest seen for 15 years as manufacturers also signalled positive expectations for growth.

Panellists also sought to support production growth by ensuring they had sufficient stock at their plants. Buying activity was increased at the fastest pace since February 2011, with a proportion of these purchases going directly into stock. Input inventories rose for a fourth month in a row as a result.

"Suppliers signalled some difficulty in dealing with strong growth of purchasing activity. Insufficient stock meant that vendor delivery times lengthened to the greatest degree in three-and-a-half years.

Finally, input price pressures remained modest as a weaker euro against the dollar was countered to a degree by lower global oil prices. Output charges were little changed, up only marginally following four months of deflation. "

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