Thursday 21 March 2019

Manufacturing shakes off Brexit jitters with 17-month high

Philip O’Sullivan of Investec
Philip O’Sullivan of Investec

Sean Duffy

Manufacturing in Ireland rose to a 17-month high in December, according to the latest Investec PMI index.

Based on a survey of managers, it measures output on an index scale of 50, where a number above 50 shows growth.

The data points to resilience despite Britain's June vote to leave the EU.

The Investec PMI rose to 55.7 last month, the highest level seen since the middle of 2015. Analysts believe the surge in manufacturing is a strong indication the worst of the pressure from the Brexit vote has now passed.

The robust performance of the index owed largely to a spike in new orders, which rose at the fastest rate since last January.

That was attributed to an improvement in the overall picture in the UK, which also dipped significantly in the wake of the Brexit vote.

The improved growth in Irish manufacturing is mirrored across the Irish Sea. On Monday, data released in the UK revealed that British manufacturing now stands at its highest level since 2014. "The anecdotal evidence is that there has been an uptick in activity in the UK. That is significant for the domestic economy in Ireland, because 40-45pc of all Irish indigenous exports go to the UK," Philip O' Sullivan, chief economist at Investec, said.

"There was initial reticence to place orders in the aftermath of the Brexit vote, and that seems to have subsided somewhat in the last quarter of 2016 and has given people more confidence to start placing orders," he said.

Job expansion also grew in the sector for the third successive month. The number being created in December grew at the fastest rate for 19 months, confounding initial fears that the fallout from Brexit could lead to job losses due to retrenchment across the sector.

A rise in the cost of raw materials saw input costs rise, however this was offset by a hike in the amount being charged for manufactured products.

The manufacturing sector in Ireland has now been in expansionary territory for 43 months - an indication of the vital contribution made by the sector to Ireland's impressive economic performance.

A steady growth in domestic demand has also boosted the sector.

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Irish Independent

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