Manufacturing and service record softening growth

Manufacturing production for the three months between May and July was down 9pc on the preceding three-month period, official data shows.

But figures for July alone show that production was 8.4pc higher than in June, and on an annual basis, was 18.5pc better than the same period last year.

Alan McQuaid of Merrion Stockbrokers branded the data from the Central Statistics Office as being mixed, but suggested the disappointing performance over the three months may not be sustained.
“Although there remain concerns about the underlying health of the global economy, particularly China, we think overall growth will hold up this year and next, particularly in the US and UK, which is good news for Ireland,” Mr McQuaid said. “Furthermore, only a very small amount of total Irish exports go to China, and the Irish PMI data remain positive.

“Indeed, the manufacturing PMI has been in expansionary territory for more than two years running up to August, even though the index fell to its lowest level in a year-and-a-half last month.”
Mr McQuaid said a strong showing in Irish manufacturing output is forecast for this year, following last year’s increase of just over 24pc.

“We expect another robust double-digit increase, which at this stage now looks like being in the 15-20pc range.”

The CSO data showed that in the so-called modern sector, which is made up of a number of high technology and chemical sectors, there was a monthly increase of 3.4pc in July.

However, the more employment intensive traditional sector saw a rise of 6.4pc.

Meanwhile, in the services sector, employment has grown at its fastest pace in three months, but the pace of growth in the sector overall eased slightly last month.

The rate of expansion in new business eased last month, but remained strong amid a general improvement in business conditions, according to the latest Purchasing Managers’ Index for the sector.

New orders have now risen for 37 months in a row, with new export orders last month rising at the fastest pace since January.

There was also positive news out of the Eurozone more broadly, with a separate survey showing business activity in the bloc accelerated at its fastest pace in more than four years last month.

Philip O’Sullivan, economist with specialist bank Investec, said confidence among Irish companies in the services sector is strong.

“It is clear that most services firms are positive on the outlook for the sector,” Mr O’Sullivan added.

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