Ireland: Brexit fallout contributes to over-three-year low Manfacturing PMI reading
August 2, 2016
The Investec Manufacturing Purchasing Managers’ Index (PMI) plunged from June’s 53.0 to 50.2 in July, marking the lowest reading in over three years. July’s PMI marked the first post-Brexit data for Ireland. Despite the drop, the PMI remains slightly the 50-threshold that indicates expansion in the manufacturing sector, where it has been for 38 consecutive months.
July’s reading reflected a drop in output and flat growth in new business. Output contracted for the first time since May 2013 amid worsening market demand. The EU-membership referendum in the UK along with a broader slowdown contributed to a fall in new orders. Meanwhile, staffing by Irish manufacturers increased while input buying dropped for the first time in two and a half years due to lower demand. Regarding price developments, input prices rose on the back of higher raw material prices and the increase in output prices accelerated over the previous month.
According to the survey report, “this is a disappointing, but not particularly surprising, report. 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.”