Saturday 24 February 2018

Weaker pound lifts UK exports, hurts Ireland

Stock image / PA
Stock image / PA
Colm Kelpie

Colm Kelpie

Ireland's manufacturing sector last month posted its largest improvement since June, signalling companies may be starting to shrug off the effect of the Brexit vote.

But the level of new export orders only grew marginally, as sterling weakness made securing new work in the UK more difficult, according to the latest Purchasing Managers' Index for the sector.

In the UK, the sector retained strong growth thanks to the weaker pound, although this also pushed up costs.

Philip O'Sullivan, economist with specialist bank Investec, sounded a note of caution on the Irish data.

"We previously spoke of 'well-founded caution on the part of Irish manufacturers as we head into year end'," Mr O'Sullivan said.

"October's modest improvement is not enough to make us change that assessment, not least given next week's US elections, which could have a significant impact on the health of the sector."

Mr O'Sullivan pointed out that about 22pc of Irish merchandise exports go to the United States.

The seasonally-adjusted PMI posted 52.1 in October, up from 51.3 in September and signalling the largest improvement in business conditions since June.

"That said, the rate at which the health of the sector strengthened remained modest," the PMI report said.

Production increased for the third month running, with respondents indicating that higher new orders and improved efficiency had contributed to the rise in output.

New business also rose for the third consecutive month, amid signs of strengthening client demand.

The rate of input cost inflation picked up in the month amid reports of higher costs for items such as food and oil as well as a strengthening of the US dollar against the euro.

Meanwhile, Britain's factory sector maintained most of its robust growth last month after a weaker pound boosted exports, though this also fuelled inflation.

The Markit/CIPS Purchasing Managers' Index slowed slightly to 54.3 from an upwardly revised 55.5 in September, which was its highest level in more than two years. (Additional reporting Reuters)

Irish Independent

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