THE RATE of decline in Irish manufacturing slowed last month, the latest figures show. The NCB Purchasing Managers Index (PMI), which measures the manufacturing industry, hit 39.4 in May, indicating a fall in activity on the previous month.

Any measure below the benchmark of 50 indicates a decline in activity, while any rating above the benchmark means activity has increased. The May reading was an improvement on the April return of 36.1. However, the better performance only means that the pace of decline has slowed, not that it has reversed. The index dropped to 35.1 in March.

NCB Stockbrokers economist Brian Devine said that May was the fourth consecutive month in which the index rose. “But with the index still below 50, the sector is continuing to contract,” he said. The new export orders index increased from 41.2 to 43.4.

“This is an important reading and we will watch this carefully for signs that Ireland and its manufacturing sector are being dragged up by an upturn in economic activity, with our main trading partners expected to return to growth by the end of the year.”

He added that the export orders element of the PMI would be more likely to top the all-important 50- mark before the headline reading.

The index shows that workers in manufacturing are losing their jobs. The employment index was at 37.5 in May, indicating another fall in jobs.

However, the fall was less severe than in the previous five months and ahead of its six-month low of 30.5 in February.

Output, which is the actual amount of goods produced, was also down, at 40.4. The pace of reduction eased for the third month in a row. In March it reached 36.4 and in April 36.9.

Competition and tough trading conditions mean that manufacturers have to keep cutting the prices they charge. The index’s output prices reading fell to 35.4 last month.

In April, the corresponding figure was 32 and in March it was 33.4.