Sterling hits Irish industrial output

The drop in sterling value and the wider uncertainty since June’s Brexit vote is having a visibly negative effect on Ireland’s manufacturing sector, according to one leading economist.
Sterling hits Irish industrial output

“Uncertainty on Brexit, the depreciation of sterling against the euro and weaker global demand appear to be holding Irish manufacturers,” Davy Stockbrokers’ chief economist Conall Mac Coille noted yesterday.

However, Mr Mac Coille said the recovery in the domestic economy can keep Ireland’s GDP growth above or close to 3% this year and next.

He was reacting to latest CSO figures showing a provisional 8.2% monthly rise in manufacturing production in June, but a 0.4% year-on-year decline.

“The slowdown in Irish industrial production cannot be entirely dismissed as another statistical mirage,” he said. “Traditional sector output has contracted by 0.4% in the first half of 2016. This is a significant slowdown from the 4.4% expansion in 2015. The labour- intensive traditional sector accounts for two-thirds of employment in Irish industry.

“We knew goods exports — excluding pharmaceuticals — grew by just 2.1% in the first five months of 2015 following the 16% rise last year. Similarly, Ireland’s manufacturing PMI fell to just 50.2 in July, barely above the 50 no-change level.”

Davy suggests all that means manufacturing and exports will make a smaller contribution to GDP growth this year, placing the onus on the domestic recovery. However, it is upbeat regarding recent services and construction sector indices.

“Despite weaker trends in manufacturing, the rebound in domestic demand should ensure Ireland’s GDP growth remains above or close to 3% through 2016 and 2017,” said Mr Mac Coille.

More in this section

Budget 2022 Logo

What impact will this  year's budget have on you and your business.

IE logo


The Business Hub

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Some of the best bits from direct to your inbox every Monday.

Sign up