Things are looking up for Ireland at present with several corporate relocation in progress to Dublin from London and growth in the country’s manufacturing sector hitting a two-year high, with sharp and accelerated expansions in both output and new work.
This fed through to increased jobs in the sector. Manufacturing production increased at a substantial pace during August, according to the latest Purchasing Managers’ Index (PMI) for the sector.
Investec Bank economist, Philip O’Sullivan, said Irish firms are right to be upbeat about the future. “The data show that the rate of growth in new orders has quickened to the fastest since January. Panellists reported an uptick in growth in new report orders which they linked to the securing of new customers and success in international markets.” The seasonally adjusted Investec PMI rose to 56.1 in August, from 54.6 the previous month.
The pace of increase in new business also quickened, and was the sharpest since January.
Firms reported having been able to secure new customers, with some mentioning success in international markets. New export orders also rose. Increasing levels of new work resulted in a further build-up of outstanding business during August.
“The forward-looking future output index was little changed last month, with more than 90 per cent of panellists expecting to see flat or rising output over the next 12 months,” O’Sullivan said.
He added, “Given the improving international economic backdrop, we think that Irish manufacturing firms are right to be upbeat about the outlook.” Meanwhile, across the Irish sea, UK’s factory activity grew more strongly than expected in August as work flowed in from home and abroad. The Markit/CIPS UK Manufacturing Purchasing Managers’ Index jumped to a four-month high of 56.9 from 55.3 the previous month.
The government is hoping manufacturing will grow on the back of the fall in the value of sterling, which makes British exports cheaper.
Rob Dobson, Director at IHS Markit said that strong performance last month, after a good July, should help support overall growth in the third quarter. That could “add fuel to hawkish (Bank of England) policymakers’ calls for higher interest rates,” he said. Meanwhile, almost 20 million euros in loans have been approved under an Irish microenterprise loan fund, according to the Microfinance Ireland report for three months to June.
Ireland’s retail sector is likely to be affected by the plummeting pound which will spark a retail war and home-grown shops will struggle. Irish shoppers are set to benefit from a multi-million euro price war as UK retail giants, boosted by weak sterling, fight to regain lost market share in Ireland. On an imagined situation of sterling in parity with the euro, UK-based retailers will effectively secure a 25 per cent price advantage.
But there are growing concerns that consumers will still head to Northern Ireland (UK) or online to secure savings from the plummeting pound. Major UK-based retailers are slashing prices in Irish outlets as their margins have been boosted by the falling value of sterling. UK retailers, including Marks & Spencer, Carphone Warehouses, PC World and dozens of Boutique outlets will be under pressure to pass sterling export savings to customers in Ireland.
Irish retail groups warned the government that hard-hit local traders must be helped in remaining competitive if Ireland is to further avoid a flood of trade across the border with Northern Ireland.
Retail Ireland director Tom Burke said Ireland faces huge retail challenges. “It is a very, very good time to be an Irish shopper, but it is a very, very challenging time to be an Irish retailer” he said. Burke pointed out that Irish retail prices are now effectively back to 2008 level.
Traders are now struggling to cope with reduced margins and a higher cost base due to commercial rates increases, wage demands and higher utility charges.
Retail Excellence Ireland (REI) Executive Lorraine Higgins warned that Irish retailers are hurting. “Retail has been adversely impacted for some time as a consequence of Brexit, which saw sterling devalue consistently since then,” she said.
Currency volatility means yet more pain for Irish exporters — and mounting problems for the Irish car industry. New-car registrations for August were down 21 per cent to 5,754 and are trailing year-to-date by 10 per cent. However, car imports, the majority from the UK, are up 40 per cent (62,161) so far this year.