The manufacturing sector is expected to post production growth of over 5% in 2014 — marking the first annual increase in three years — as the negative effects of the so-called ‘patent cliff’ begin to subside.
Latest provisional CSO figures published yesterday showed that production levels among manufacturing firms grew by 4.8% in the first quarter compared directly to the last three months of 2013; and were up by 4.4% on the first quarter of last year. Data for March shows a 4.7% monthly growth in production, and an 11.5% annualised jump. Earlier available February data — which had shown year-on-year growth of 5.3% — has been revised downwards to 3.5%.
The first quarter turnaround — following second half declines last year — was helped by a near 13% monthly increase in production, during March, from the technology and pharmaceutical-reliant ‘modern’ sector (also up by nearly 21% on a year-on-year measure), while the domestic economy-led ‘traditional’ sector saw production drop by 6.4% in the month and by 0.8% year-on-year.
The strong showing from the ‘modern’ sector led David McNamara of Davy Stockbrokers to suggest the emergence of “tentative evidence that the worst of the patent cliff [revenue declines from drugs coming off patent and being joined in the market by generic equivalents] may now have passed”.
Merrion Stockbrokers’ Alan McQuaid suggested that while the ‘modern’ sector should continue to lead overall manufacturing growth in the short-term, the patent issue could still provide a drag “for some time to come”, but should be mitigated by a recovery in UK and eurozone demand for Irish goods.
“After a weather-affected sluggish start to 2014, the indications now are that major developed economies are — in the main — finding their feet again, which points to increased global demand going forward. And, in our view, Ireland is better placed than most to take advantage of that,” he added.
Mr McQuaid added that after successive annual declines in manufacturing production — of 1% and 2.2% — in the past two years, 2014 should post an increase of over 5% this year.
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