Economy

Irish manufacturing sector mired in Brexit slump

AIB’s latest PMI shows activity in Ireland worsened for fourth month running

Dublin port. ‘The weak Irish data of recent months clearly show that the sharp slowdown in global manufacturing over the past year or more is being felt in Ireland also,’ says AIB chief economist Oliver Mangan. Photograph: Bryan O’Brien

Tue Oct 1 2019 - 05:21

Manufacturing activity in Ireland worsened for the fourth month running in September with the ongoing Brexit turmoil leading to a reduction in new orders and output, according to new data. The UK's increasingly messy European divorce also drove business confidence in the sector to a record low.

The September reading of 48.7 in the AIB manufacturing purchasing managers' index (PMI) represented one of the sharpest contractions since April 2013. A figure below 50 indicates a contracting sector, anything above 50 points to expansion.

"The weak Irish data of recent months clearly show that the sharp slowdown in global manufacturing over the past year or more is being felt in Ireland also," said AIB chief economist Oliver Mangan. "Brexit uncertainty is an additional negative factor weighing on activity here."

The survey said anecdotal evidence from panellists indicated that demand conditions continued to deteriorate, both domestically and abroad. Not only did total sales decrease for the fifth month in a row, but also at the joint-sharpest rate since January 2012.

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Additionally, new business from abroad fell in September at the fastest pace since August 2009, amid weaker sales to the UK, it said.

Unchanged

The static metric for output and new work left employment among Irish manufacturing companies unchanged, the report said. This marked the first time since September 2016 that employment had failed to rise. Some panellists decreased their payrolls in line with lower customer demand levels, the report said.

“Key elements of the Irish September data remained weak,” said Mr Mangan. “Output fell for the third month in a row in the face of weaker demand. New orders fell for the fifth consecutive month, with declines in both domestic and foreign orders.”

New export orders were particularly weak, with respondents singling out soft UK orders in particular amid ongoing Brexit uncertainty,” he added.

AIB's report reflected conditions generally in Europe with manufacturing sentiment in the euro zone now at a a seven-year low, according to figures last week. The flash euro zone manufacturing purchasing managers index fell to an 83-month low of 45.6 in September, down from 47 in August.

German manufacturing PMI fell to 41.4 in September from 43.5, the worst reading in more than a decade.

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