Brexit uncertainty affecting manufacturing firms
Manufacturing outputs across Ireland have begun to slow down after fears about the Brexit outcome and the upcoming EU referendum in the UK.
Investec’s Manufacturing Purchasing Managers’ Index fell to 51.5 in May, compared to 52.6 in April.
Philip O’Sullivan, Chief Economist at Investec Ireland, expects the manufacturing activity to pick up next quarter after Britain’s position in the EU becomes clear.
He commented: “Assuming that our base case that UK voters choose to remain in the EU comes to pass, we suspect that conditions for Irish manufacturing firms should pick up in Q3 and beyond.”
Poor manufacturing activity across Ireland coincided with the number of new export orders falling for the first time in nearly three years. Ireland sends around â‚¬1.2bn worth of goods to the UK each week with one-seventh of all exports heading over to Britain.
Despite the downturn in outputs, a separate survey by the UN Industrial Development Organisation (UNIDO) has placed Ireland’s competitive industrial performance higher than UK counterparts. Ireland was ranked 10th out of 142 countries with the UK four places behind in 14th place. Germany was ranked 1st followed by Japan and the United States of America.
Ireland’s leading manufacturing activities, according to UNIDO, include chemicals and chemical products, food and beverages, and the production of furniture. The country’s share of manufacturing value added in gross domestic products was around 15%, according to the report.