Tuesday 13 November 2018

Manufacturers shrug off Brexit with 15pc hike in their output

Stock image: PA
Stock image: PA

Colm Kelpie

The total value of products manufactured and sold here last year was €133.3bn - up more than 15pc on 2015, official data shows.

The most significant increase in net selling value - the amount received by the seller after deducting the costs of making it - was in the pharmaceutical sector.

Basic pharmaceutical products and preparations increased by 128.5pc over a two year period from €25.5bn in 2014 to €58.3bn last year, according to the data published by the Central Statistics Office (CSO).

The CSO said the surge in net selling value for the pharmaceutical sector reflects the fact that companies are securing a higher value for their products.

They're also increasing employment.

But part of the surge is due to downwards revisions in past year to exclude manufacturing outside of Ireland. It also includes transfer pricing activities, which involve intercompany transfers for accounting purposes and not traditional sales.

"As with all of the CSO numbers that have multinationals included in them, you have to be careful," said Goodbody economist, Dermot O'Leary.

"If you look at employment or wages, they have been growing strongly, in the range of 5pc to 6pc.

"There is transfer pricing that is part of it. We're still a very important hub for the pharmaceutical industry."

Strong performances were also reported, however, in the food, chemical and computer sectors, with all four sectors combined accounting for about 83pc, or €110.4bn, of total net selling value in Ireland last year.

That's up a massive 80.6pc, or €93.2bn on 2015.

Although the figures do not reflect the bounce in contract manufacturing, where firms here contract firms overseas to do work for them, and which helped skew the GDP figures in 2015, it does include exports. The CSO said the products can be sold here for domestic or international consumption

The figures also tally with the strong purchasing managers index reports for the manufacturing sector, with last month's recording the most marked improvement in two years.

Output increased at the fastest pace for close to two years on the back of improving client demand leading to higher new orders, although new orders from abroad helped drive that demand. That indicates that the exporting sector may be so far weathering any Brexit effect, particularly from weakened sterling, with separate data earlier this month showing that goods exports to Britain were €153m higher in May than in the same month last year.

Goods exports across the Irish Sea totalled €1.24bn in May, compared with €1.1bn in the same month last year.

Irish Independent

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