Rise of up to 20% in manufacturing output forecast

Production from Ireland’s manufacturing industries is expected to rise by as much as 20% this year, on the back of the strongest monthly growth data for 15 years.

Such a strong annual rise would follow on from a 2.1% decline in 2013.

Latest industrial production figures from the CSO, published yesterday, show a near 13% month-by- month rise in July and an almost 20% increase on a year-on-year basis.

“Based on the figures up to July and on the strong PMI [purchasing managers’ index] data, we are now looking for manufacturing output for the year as a whole to be around 20% higher than 2013, following a decline of 2.1% last year,” Alan McQuaid, chief economist with Merrion Stockbrokers commented.

Predictably, the pharmaceutical, hi-tech, multinational-led “modern sector” led the way, with a monthly increase in production of 11.4%.

However, the domestic -led “traditional sector” also saw a 4.7% month- on-month output rise and was up 6.5% on a year-on- year basis — its fourth consecutive annual rise.

“The improvement in the UK economy and recovery in sterling are clearly a positive development on this front. And the good news is that the outlook for the UK economy over the next 12 to 18 months looks very strong,” according to Mr McQuaid.

The “modern sector” is still likely to drive Irish manufacturing growth for the foreseeable future and this sector’s prospects look good, he stated.

“With the global economy set to gather speed, demand for Irish goods in general should start to pick up. Ireland is better placed than most to take advantage of an upturn in the world economy.

“The manufacturing data, taken together with the first quarter GDP/GNP figures, are now more consistent too with the improvement we’ve seen in the labour market and employment over the last year or so. However, it is crucial that the economy remains competitive, something which the IDA has recently pointed out, saying any loss of competitiveness would have a negative impact on the levels of foreign direct investment here.”

On the back of yesterday’s CSO figures Davy Stockbrokers said industry looks set to make a strong positive contribution to GDP growth this year.