Industry expects modest recovery in 2013

Production levels from Ireland’s manufacturing sectors are expected to show a modest recovery this year, after falling by 1.3% in 2012.

The latest Central Statistics Office data, published yesterday, detailed a mixed end of the year in terms of industrial production levels.

December showed a strong 11% increase when compared to November and, on a year-on-year basis, production in December increased by 2.8%.

However, the final quarter of last year saw a 4.4% decline on the preceding three month period.

While the so-called traditional/indigenous manufacturing sector saw a 1.3% annualised and monthly fall, its fourth decline in five months, encouragingly, the “modern” sector posted a monthly production increase of 9.3% and a year-on-year rise of 1.9% in December.

These figures mark the first time that the technology and pharmaceutical-heavy modern sector posted an annualised increase in production for four months.

Despite concerns about the drug patent expiry issue, pharmaceutical production was up strongly in the month.

“The threat of a spectacular headline-grabbing contraction in Irish GDP in the fourth quarter — driven by the pharmaceutical patent cliff — appears to have receded,” noted Conall MacCoille, chief economist at Davy Stockbrokers.

He added that the 4.4% fourth quarter fall in industrial production last year, was actually better than the anticipated 8% decline.

“The big picture is that the pace of growth — of both Irish exports and industrial production — has slowed sharply through 2012, hurt by the eurozone recession,” said Mr MacCoille.

According to Alan McQuaid, economist with Merrion Capital, that continuing uncertainty in the global economy — particularly in the eurozone and Britain — could keep overall production levels subdued in the near-term.

This, he noted, “does not augur well for the prospects of Irish exports; an integral part of the country’s economic recovery hopes.”

“But, whatever about the short-term, we believe that when the world economy regains momentum, Ireland is better-placed than most to take advantage,” said Mr McQuaid.

“We are hopeful that 2013 will be a better year, on the economic front, both at home and abroad.”

Mr McQuaid concluded that Irish manufacturing output should post an overall “modest single digit volume increase” in 2013.