Irish manufacturing rebounds, but Brexit likely to cause damage - PMI
Irish manufacturing recovered to a three-month high last month, according a survey concluded the day before Britain voted to leave the European Union, a decision that is expected to hurt Ireland's economy.
The Investec Manufacturing Purchasing Managers' Index rose to 53.0 in June from 51.5 in May, when it slowed to its lowest reading in almost three years amid fears the British EU referendum would weighed on the Irish economy.
The survey, which has remained above the 50 line that separates growth from contraction for 37 straight months, was conducted between June 13 and June 23, the day voters across the United Kingdom went to the polls.
The UK is the second-largest market for Irish merchandise exports, and the report's authors said that while a return to growth in new export orders was very welcome after May's decline - the first in 34 months - the rebound may be short-lived.
The new export-order sub-index rose to 53.1 in June from 49.5 a month earlier. One in seven Irish manufacturers sell products into the UK.
"Given sterling's recent sharp fall against the euro and wider global uncertainties, we are cautious around the near-term prospects for this component," said Philip O'Sullivan, chief economist at Investec Ireland.
"There are some indications within the report that firms were conservatively positioned going into the referendum. For a second month in a row there was only a very slight increase recorded in the quantity of purchases index, while stocks of
purchases contracted for a second month running."
The Irish economy outperformed the rest of the euro zone for a second year in 2015, with gross domestic product growing by 7.8pc, and is forecast to do so again this year, growing an expected 4.9pc.
Finance Minister Michael Noonan has already said his department would cut the forecast for 2017 growth to around 3.4
percent from 3.9pc. Investec said last week that it is likely to downgrade its GDP forecasts for 2016 and 2017.