Economics: Irish manufacturing output projected to have declined year-on-year in October

Also this morning, the CSO will publish Ireland’s official industrial output for October. In the three-month period, July to September, Irish manufacturing output was down 1.1% on the preceding three-month period. Furthermore, in September itself, production was down 3.2% in the year, following a revised annual increase of 1.9% (+2.4%) in August. In the first three-quarters of 2017, output was 3.8% lower on average than the same period last year.

The “Modern” sector posted a monthly increase of 0.2% in September but was down 2.3% in the year as against a revised annual rise of 3.8% (+4.1%) in August. Meanwhile, output from the indigenous sector fell 1.1% in the month and 10.4% in the year in September, the sharpest annual fall in a number of years, and the third decline in the past four months.

There have been worries about the fall in sterling against the euro since the “Brexit” referendum and its potential negative impact on the industry’s exports, of which just under a half go to the UK. Indeed, following “Brexit” the biggest losers going forward will most likely be the indigenous companies.

For 2016 as a whole, there was an average increase in manufacturing output of just 0.5% as against large annual rises of 38.5% and 24.2% in 2015 and 2014 respectively. Output this year looks set to post a single-digit drop in volume terms on 2016. The outlook for production next year remains very uncertain given the whole “Brexit”/sterling issue. At this stage, we would say another single-digit decline is on the cards.

As regards October, we are looking for a 5.0% annual fall in manufacturing output.

Alan McQuaid (05/12/17)
Economist