The latest data on the manufacturing sector published by the National Statistics Office refers to the first months this year. This was a period marked by a referendum on Malta's membership of the European Union and the general election.

It was a time when one would have expected an element of uncertainty that would have impacted on the manufacturing sector, but the data essentially confirms the view that the manufacturing sector has in the main withstood the international economic slowdown and is now well poised to take up the challenge of EU membership and the opportunities it brings with it.

There is an evident resilience in this sector that is based on the strong foundations on which it has been built and the support it receives from government as well as the country's economic, social and political environment. There used to be doubts as to whether the country could sustain a strong manufacturing sector given the experience of other small economies like that of Cyprus.

Doubts had also been expressed as to whether the policy of the government was conducive to the development of the manufacturing sector. These doubters have been proved wrong as it is evident that the government's policy has helped the manufacturing sector to grow while at the same time restructuring the economy.

The data in hand refers to international trade and therefore to the exports of manufactured goods for the first four months of the year, and to the aggregate sales, employment, investment and wages and salaries in what are described as the large manufacturing firms that in all represent something just over two-thirds of the total employment in the manufacturing sector for the first three months of the year. I would like to highlight once more the one lacuna in this data. All the information is provided in monetary terms. There is no indication on volume and so it is difficult to determine correctly the level of industrial production in real terms. This is particularly important when most firms are reporting that the unit selling price of their products is going down. This would mean that an increase in sales in monetary terms would probably have been accompanied by an even greater increase in volume terms.

In fact, anecdotal evidence suggests that firms have been experiencing an increase in the level of activity through increased orders, but this increase is not being supported by a corresponding increase in revenue. This would mean that firms have had to improve their operational efficiencies to maintain their competitiveness.

With regard to domestic exports of manufactured goods (that is what was produced locally), the data for the first four months this year shows an increase of Lm6 million over the same period last year. This represents an increase of 2.5 per cent.

The European Union and the European Free Trade Area absorbed 46.7 per cent of our total exports (that is including both domestic exports and re-exports) in the first four months of last year and this year they have absorbed 47.4 per cent of our exports.

However, the positive data on international trade does not stop here. During the same period, we have had an increase of 15.3 per cent in the imports of capital goods and an increase of 11 per cent in the imports of industrial supplies. Capital goods imply investment in machinery while industrial supplies imply raw materials or inputs of a semi-finished nature for use in manufacturing.

Therefore, an increase in imports of these two variables would indicate an increased level of activity in the industrial sector.

The data on the large manufacturing sales reflects these trends. In fact, sales by these firms increased by over Lm7 million in the first three months this year, an increase of 3.1 per cent.

This improvement in sales performance is not limited to one sector only but is spread over a number of sectors. This indicates that the progress registered is across the board involving a whole range of products and hence the claim that the manufacturing sector as a whole has been able to withstand the effects of the international economic slowdown.

In terms of employment, we have had a drop of 400 in the number of persons employed by these companies. This drop is in the main attributable to one sector, the clothing sector, even though this sector did register an increase in sales during the first three months this year, compared to the same period last year.

However, in spite of a drop in the number of full-time employees in these firms, we have still had a substantial increase in wages and salaries paid out during these three months. In fact, wages and salaries increased by nearly Lm2.5 million in the first three months this year, compared to the first three months last year, an increase of 8.6 per cent.

The average wage per employee increased from Lm1,327 to Lm1,469, an increase of 10.7 per cent. The average weekly wage per employee increased from Lm102 to Lm113. This is likely to have resulted either from an increase in the number of hours worked, and therefore due to the payment of overtime; or from an increase in part-time employment, which is not captured by this data.

Whatever the reason, the increase in wages and salaries paid out is a reflection of an increased order book and, therefore, an increased level of sales.

Investment also registered a decrease in the first three months this year and this can also be attributed to one sector. However, the data on international trade indicates that there was a pick-up in investment in the fourth month of the year. One must also appreciate that certain investments were also held back until it became clear as to what direction the country was taking.

With the important political decisions that had to be taken behind us, manufacturing companies are now in a position to plan for the future with a greater degree of comfort.

Although the data does show positive trends about the manufacturing sector, it would be wrong to assume that there is little to worry further about. International events and investment decisions taken in boardrooms far away from Malta shall always have a significant impact on a sector that exports most of what it produces. This sensitivity is the primary reason why we need to maintain the competitiveness of firms operating in Malta and to sustain the positive performance we have achieved so far.