The pace of growth in Ireland’s manufacturing sector hit a five-month high in December as firms stockpiled ahead of neighbouring Britain’s Dec. 31 departure from European Union trading rules, a survey showed on Monday.
The AIB IHS Markit manufacturing Purchasing Managers’ Index (PMI) climbed to 57.2 in December from 52.2 in November, recording the second-highest reading since August 2018. The five percentage-point rise was the third-largest on record.
“Stockpiling ahead of the end of the Brexit transition period was one factor behind the sharp rise in the index,” said AIB chief economist Oliver Mangan, although he said global strength in manufacturing was also a factor.
The survey responses were gathered ahead of the announcement of an EU-British trade deal on Dec. 24.
The main index has been at or above the 50.0 level that separates expansion from contraction for the past seven months after three months of contraction during the country’s initial COVID-19 lockdown.
The new orders sub-index rose at the fastest rate since July on strong demand and advance orders ahead of potential disruptions once the Brexit transition period ends.
Manufacturers also boosted purchasing to build up their own stocks, contributing to the largest increase in stocks of purchases since April 2019.
Manufacturers reported slightly lower confidence about output growth in 2021 than they had the previous month, but confidence was still at the second-highest level recorded in 10 months.
“Firms remain optimistic about the 12-month outlook for production, no doubt hopeful that the recent positive news on Covid vaccines will help bring about an improvement in economic conditions over the course of 2021,” AIB’s Mangan said.
Main Photo: A general view of the Grand Canal docks area in Dublin, Ireland. EPA/MIKKO PIHAVAARA