Demand for Irish exports slows

Overseas demand for Irish manufactured goods dwindled in April, just two months before key trade partner the UK votes on its future relationship with the EU.

Latest data from specialist bank Investec Ireland shows that the manufacturing sector saw the slowest rise in new customer orders in nearly two and a half years in April.

The sluggishness was most acute in the export sector, with new export orders expanding only marginally in the month.

A general weakening in demand in international markets was blamed for the underwhelming performance.

Seen as the chief barometer of health for the sector, Investec’s manufacturing purchasing managers’ index (PMI) showed a reading of 52.9 points for April; down from a reading of 54.9 for March. While any reading above the neutral 50 point mark denotes an industry in growth mode, the reading marked the weakest for the sector since November 2013.

Despite the disappointing month, Investec remained upbeat as staff hiring levels continued.

“While the rate of expansion in the employment index [firms hired more staff in April for the 34th straight month] has slowed to its weakest seen in 2016 so far, the ongoing increase in hiring activity suggests that Irish manufacturing firms expect that the current softness in new orders may not prove enduring,” said Investec Ireland’s chief economist Philip O’Sullivan.

However, he warned: “With that being said, we think the second quarter is likely to prove to be a tricky period for many Irish manufacturing firms ahead of June’s EU referendum in the UK — the destination for roughly one-seventh of Irish merchandise exports.

"In this regard, firms should give careful consideration to strategies designed to provide some protection in the event of further sharp moves in the currency and/or commodity markets.”

Investec‘s PMI came a day after corresponding manufacturing sector data for the rest of the eurozone painted a mixed picture for the region.

The surveys painted a mixed picture of the wider economy.

Manufacturing growth was strong in Italy and Spain last month and Germany showed signs of reviving, but activity in France contracted at the steepest rate in a year.

Markit’s manufacturing PMI for the eurozone rose to just 51.7 from March’s 51.6, slightly better than an earlier flash estimate of 51.5.