Ireland's manufacturing sector dropped to a new record low in November as output and new orders contracted at the fastest rate in the last decade.
The NCB Purchasing Managers' Index (PMI), which measures manufacturing activity, dropped to 37.1 last month, below than the previous record low of 39.7 in October. Any reading below 50 marks contraction.
November's performance was worst since the survey began in May 1998 and suggests an acceleration in the contraction in the sector.Production has declined in each of the last nine months after more than four years of sustained expansion.
Brian Devine, chief economist at NCB stockbrokers, said the figures masked strong growth from hi-tech firms but added their performance was unsustainable with falling demand from the UK and United States expected next year.
"The traditional sector has suffered badly and there is no doubt that the majority of firms in Ireland's manufacturing base are experiencing difficulty," Mr Devine said.
November was the 12th consecutive month manufacturing employment has declined, with the report noting the rate of job losses was similar to a series record high seen in October. Almost 30 per cent of firms surveyed reported a reduction in staff numbers last month, according to Markit, which compiles the PMI data.
New orders also hit record lows last month due to a fall-off in demand as the wider economy slows down. More than 37 per cent of manufacturing firms said production was lower in November.
The fall in export orders to the UK, continental Europe and Asia was the second steepest over the last 10 years and November was the ninth consecutive monthly fall.
With orders declining manufacturers concentrated on backlogs but the reading here too dropped to a series record low of 30.5.
A rapid decline in oil prices has contributed to an easing of raw material costs with some companies noting the weakness of sterling made buying from the UK cheaper last month. This is the first instance of raw material deflation since July 2003, the Markit report noted.
The euro's strength against sterling has hit demand for Irish products from Britain but Mr Devine noted that the corresponding drop in the cost of British inputs and a weaker oil price should cut Ireland's import bill in 2009.
"The boost to Irish GDP next year from net exports is set to come from falling imports not rising exports," he said.
Output price inflation, or the cost of finished goods, eased for the fourth straight month in November. The rate of inflation was the slowest in over four years.
On a euro zone basis, Markit’s manufacturing PMI reading slumped to 35.6 in November, a low not seen in the survey's history and well below forecasts.
The European data echoed a survey published on Sunday night showing Chinese manufacturing activity also slumped on a collapse in export orders, a report that came just days after an aggressive interest rate cut there
Britain's manufacturing PMI tumbled to a record low of 34.4.
US factory activity fell in November to its weakest since 1982, according to an industry report released today.
The Institute for Supply Management said its index of national factory activity fell to 36.2 in November from 38.9 in October, below economists' median forecast for a reading of 37.
Additional reporting Reuters
