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A KEY INDICATOR of activity in the manufacturing sector has hit a 15-year high and managers in industrial firms are expecting to hire more staff to cope with that demand.
The latest Investec’s Purchasing Managers’ Index (PMI), which is based on a survey of executives in several hundred industrial companies, showed the equal-highest increase in employment forecasts in the poll’s 17-year history.
That reflected managers’ predictions that they would have to hire more workers to cope with the extra activity they were expecting.
Investec chief economist Philip O’Sullivan said respondents reported rising demand from both domestic and overseas clients with the UK earmarked as a major source of new work.
“This is a surprisingly good report, especially when you consider some of the unhelpful international developments seen during February, such as Greece, Ukraine, the Middle East and North Africa,” he said.
Last month we said that ‘the sector remains in growth mode’. Today’s report gives an indication of how resilient this growth is, but we would caution that any uncertainty ahead of the upcoming UK election (given that Ireland’s closest neighbour has repeatedly been identified by manufacturers as a key source of demand) is likely to put that to the test.”
The PMI is considered a good indicator for the strength of the economy as it predicts factory outputs heading into the future.
So what’s the catch?
Despite the bullish survey results for both manufacturing activity and jobs, employment in the sector is coming off a low base and the figures have barely rebounded since the depths of the recession.
The latest CSO numbers show total employment in the broad industry category was 244,500 for the last part of 2014 – still below where the job numbers were at the end of 2010.
In comparison, the peak figure from 2000 was 323,300 – which means nearly 79,000 more people were working in the sector at that stage.
Here’s how industrial jobs have tracked over the past 16 years:
Factory output prices have also been falling because of lower commodity costs, competition and the weaker euro, the latest survey said.
Those factors could put pressure on firms’ bottom lines and their ability to keep expanding and hiring if they continue.
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I personally feel that basing our economy on the manufacturing industry is fundamentally flawed, given that within 20 years the Bric nations will have begun to caught up in terms of education, but their wages will still be at least half the irish level.. We’ve already seen how the cheap labour in China and India managed to out compete workers everywhere in the world for low skilled jobs, once those nations move up a notch, they’ll then take all the medium skilled jobs too
That is until these new workers start demanding bigger wages. It happened in India with IT.
Manufacturing companies in certain sectors are beginning to return from places like China. The main issue is that, as the workers in these countries begin to demand better wages and working conditions, it becomes more cost effective for companies to return home to manufacture using machinery.
The apparel industry is a good example of this. Some companies are pulling out of China in favour of even lower-cost countries like Vietnam or Bangladesh while others are returning to Europe and the US to manufacture with modern automated machinery.
Our previous economic strategy largely consisted of selling houses to each other.We all know that was a stupid idea.
China has been interested in manufacturing because it can create lots of high and lower value jobs.
They have over from low cost manufacturing to investing heavily in design so they can get the best of both ends.
The reason why these manufacturing jobs are coming here is so that overseas companies can get their foot in the EU door at a relatively low corporate tax base. The UK has left themselves exposed to a high level of uncertainty over their future membership of the EU together with an uncompetive currency compared to the euro zone countries . If employment does take off here then we can also expect the flood gates to open for foreigners willing to take up positions.
I’m not sure we really want over 300,000 people working in factories. The service industry is where this economy is heading.
Irish service industry is sh*te
1/7 of total workers, working in manufacturing is reasonable.
Farming etc, food production forestry would all be in here and we can gain from expanding those sectors, IT could easily move tomorrow
Remedy. GMO back to,places where people are pleasant and helpful, do,not go back to the others. I think a lot of people do quietly boycott like that and either the service improves or they go under.
Some are difficult, being the only ones of the kind, especially in rural Ireland but these smiling assassins will get their come uppance one day.
Sorry, go not GMO – machine speaks for itself.
There is a job going in the spar shop down the road where is the Minister for Gobs Richard Bruton to make the announcement.
We are in recovery woo hoo.
Manufacturing is a fundamental requirement for economic stability. Manufacturing is a real wealth creation mechanism which is important.
@paul Mac, would you prefer if they weren’t recruiting?
Service-oriented economies rely heavily on the stability of other nations for their own economic stability. Manufacturing-oriented economies like that of Germany have proven to be less vulnerable to global economic downturns. Services make more money but manufacturing offers more stability.
Investec-vested interest. Hardly ‘obective’…they flog ‘wealth management’ products…thats pensions & investments to us ordinary folks…Jonny Sexton is their ad-man atm. As i say…Investec…not exactly objective nor without establishment connex…yada yada yada…
Drive to the bottom?? Anyone remember the ‘Advance Factories’ dotted around the country in times of yore ?. Same old, same old.
After years of thatcher and the tories doing their best to kill manufacturing in the uk, their manufacturing industries are coming back, they realized the service industries were not the be-all and end-all. Jaguar-landrover have invested billions, same with triumph motorcycles, jcb earthmovers, and the chinese are going to reopen mg cars in birmingham as a joint enterprise with the british.
Same thing in the usa, they tried to kill manufacturing at home and move it all to mexico, but its coming back there too.
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