Manufacturing shakes off Brexit as growth picks up

Manufacturing in Ireland gathered pace at the end of 2016, with growth at its fastest in 17 months.

The Investec Manufacturing Purchasing Managers Index rose from 53.7 in November to 55.7 last month, lending more weight to the view that the worst of the pressure after the Brexit vote has eased.

The survey showed new orders rose at their fastest in almost a year, following a brief spell in negative territory after the UK voted to leave the EU in June. Export orders were also up, which was a sharp rise on the month as conditions improved in Britain too.

Expansion

The survey’s backlogs of work element grew during December, as increased demand fuelled a sharp rise, and the expansion rate in the number of purchases was the highest in 18 months.

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Job creation picked up for the third month in a row, indicating confidence around the sector.

But firms’ stocks of purchases were lower, showing a modest decline for the month and extending that trend to eight successive months. Input costs rose sharply too, although some of this was passed on in higher output prices.

“The headline manufacturing PMI has been consistently above the 50 ‘no change’ mark separating expansion from contraction for 43 months,” said Investec’s Philip O’Sullivan. “While growth slowed precipitously following the UK’s Brexit vote, the accelerated pace of expansion seen since then shows that the sector has got back on track, presumably aided by the kicker from a strong US dollar and ongoing domestic strengthening.”