Irish manufacturing activity drops in wake of Brexit vote

Irish manufacturing activity weakened in July in the wake of the British referendum on the European Union, as the first decline in more than three years was noted for new orders .

The figures echo a similar survey for the UK, published on Monday, which revealed that British manufacturing shrank at its fastest pace in more than three years in July.

According to the Investec Manufacturing PMI Ireland report, the headline PMI tumbled to 50.2 in July (June: 53.0), its weakest reading in the 38-month sequence of expansion for the sector. The report also shows a contraction, albeit only marginal, in new orders – the first decline in more than three years.

Investec economist Philip O’Sullivan said it was a “ disappointing, but not particularly surprising” result.

“While we draw a modicum of reassurance from the relatively modest declines in both new orders and new export orders, our sense is that conditions in the Irish manufacturing sector are likely to get worse before they get better”.

Given the importance of the UK (the destination for a sixth of total exports) as a trading partner for Ireland, Mr O’Sullivan said that overseas demand was “unsurprisingly softer”, with new export orders back in negative territory (albeit only slightly) for the second time in the past three months.

Total new business stagnated in July, thereby ending a three-year sequence of expansion. A market slowdown and the UK’s decision to leave the EU were mentioned as factors reducing new orders during the month. Meanwhile, new export business decreased for the second time in the past three months.

Irish manufacturers reduced production slightly, the first contraction in output since May 2013. Some panellists reported worsening market demand.