Growth in the Irish manufacturing industry slowed to a near three-month-low in May, new figures have shown.
According to the latest Investec Manufacturing Purchasing Managers’ Index (PMI), the headline figure of growth slowed to 51.5, its lowest since July 2013.
The drop in growth is as a result of general weakening in demand with the new orders index slowing to a 30-month low, recording a very modest increase.
The 34-month sequence of expansion for new export orders has drawn to a close, however, the overall decline recorded here was small with many panellists reporting no change to the level of orders.
Investec Ireland chief economist Philip O’Sullivan said there is some evidence that Irish firms are responding to a softer demand with the rate of employment moderating for a second month in a row.
“In last month’s Manufacturing PMI report we cautioned that “Q2 is likely to prove to be a tricky period for many Irish manufacturing firms ahead of the June 23 EU referendum in the UK (the destination for roughly one-seventh of Irish merchandise exports)”.
“We expect that at least some of the weakness outlined above relates to that event and other international uncertainties. With momentum appearing to be building behind the ‘Remain’ campaign, sterling has recently begun to strengthen against the single currency, which augurs well for the near-term outlook for many Irish exporters.
“So, 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,” Mr O’Sullivan said.
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