Industrial sector leads slump in manufacturing
MANUFACTURING output plummeted in July with the so-called "modern" industrial sector leading the decline.
Irish manufacturing production was down 8.9pc on both a monthly and annual basis, according to figures from the Central Statistics Office (CSO).
Analysts blamed the slump on the fallout from the so-called "patent cliff", which is hitting the pharmaceutical sector as once-high-value drug patents expire.
The fall in July more than wiped out the 8.7pc rise experienced in June.
The Industrial Production Index has painted a mixed picture of the sector so far this year.
When the data is broken down the so-called modern sector, which is made up of high technology and chemical firms, was down 9.1pc on June's figure.
The traditional sector – which accounts for the bulk of employment – was down by 2pc but up 1.6pc on an annual basis.
Industrial production also fell in Germany in July and manufacturing rose fractionally in the UK.
Stockbrokers Davy said the "swings" in the volatile pharmaceuticals sector were to blame for the disappointing data in Ireland.
But it sought to strike a positive note. "These swings are now commonplace in the index given the series of patent expirations currently hitting the sector," said analyst David McNamara.
"Disappointingly, output in traditional manufacturing also fell on the month. Nevertheless, improving conditions in the eurozone mean the outlook is more positive in the more labour-intensive traditional sector."
Alan McQuaid of Merrion Stockbrokers said there appeared to be a turnaround in the traditional sector.
"The general weakness in the UK economy as well as the depreciation of the pound have hurt the traditional sector in recent months, though this now appears to be turning around, which is welcome news," Mr McQuaid said.
"With weakened demand from abroad hitting manufacturing hard, Ireland is increasingly reliant on its services industry.
"But services export growth fell sharply in the first quarter of 2013, though things now appear to be improving on this front."
Elsewhere, German industrial production fell more than expected in July after surging in June, adding to signs that growth in Europe's biggest economy is moderating. Output fell 1.7pc from June, when it jumped a revised 2pc, the Economy Ministry in Berlin said yesterday.
UK manufacturing production rose for a second month in July. Factory output rose 0.2pc from June, when it gained 2pc, the Office for National Statistics said.