Manufacturing to jump 25% this year

Production levels at Irish-based manufacturing firms are expected to show a jump of up to 25% for 2014, compared to a drop of 2.1% last year.

Latest CSO data supports such a strong forecast, with latest industrial production figures published yesterday by the State statistical agency showing a 38.5% year-on-year increase in output for the month of October. On a rolling month-by-month basis, production in October was 10% higher than September, according to the CSO.

“Based on the figures up to October and on the strong PMI data, we are now looking for manufacturing output, for 2014 as a whole, to be around 20%-25% higher than in 2013, following a decline of 2.1% last year,” said Alan McQuaid, chief economist with Merrion Stockbrokers.

While the CSO’s October figures showed a steady 3.5% monthly increase in output from the indigenous economy/’traditional’ sector; the multinational and high-tech-led ‘modern’ sector showed a near 10% increase and this area is set to underpin movement in the manufacturing sector for some time to come.

But, even though this is the case, Mr McQuaid said the prospects remain “very good”.

“We expect the global economy to pick up speed in the coming year and demand for Irish goods, in general, should increase as a result, with currency developments — particularly in relation to the euro/dollar — a huge plus,” he said.

“The industry output figures are also now clearly fitting better with the Irish manufacturing PMI, which has been in expansionary territory for the 18 months up to November, with the latest figure just shy of the 15-year high hit in August. 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,” Mr McQuaid added.

Meanwhile, Davy Stockbrokers suggested the latest data points to a surge in output at the start of the current quarter and suggests that industry and exports made a further strong contribution to Irish GDP growth in the second half of the year, ahead of the publication of third quarter GDP figures next week.

“While the data are volatile and could yet dip before year-end, the sector as a whole looks set to bounce back this year following a 3% decline in 2013 and should contribute to further strong GDP growth in the second half of the year,” said Davy’s David McNamara.

October saw an 8.9% rise in the seasonally-adjusted turnover index for manufacturing industries, when measured on a month-by-month basis.