CSO figures show big drop in industrial production
Signs that currency factors hitting indigenous manufacturers
Official figures show a big drop in the volume of industrial production in August compared with July.
The Central Statistics Office said manufacturing production fell by 13.7 per cent compared with July and was 8.5 per cent lower compared with August last year.
Seasonally adjusted figures for the three months from June to August show a 9.3 per cent increase, however, compared with the previous three months from March to May.
The CSO has been warning people in recent months to be cautious about interpreting the industrial production figures as they have been revised to reflect controversial economic figures published by the office in July which showed a 26.3 per cent increase in GDP last year. This was mainly due to the activities of a small number of multinational companies. The CSO says it is currently working on developing new indicators for domestic industrial production.
Today's figures show that the 'modern' sector – which includes chemicals, pharmaceuticals and high-tech industries – showed a monthly drop in production of 23.1 per cent for August this year and an annual decrease of 12.7 per cent compared with August 2015. There was a monthly increase of 0.2 per cent in the 'traditional' sector for August and an annual decrease of 2.9 per cent compared with August 2015.
Merrion economist Alan McQuaid said the data underline how important the multi-national sector is to the overall production figures, but also show how erratic and volatile the numbers can be on a monthly basis.
He added that currency movements were clearly a factor in the annual drop in the 'traditional' sector – which mostly includes indigenous companies. "There have been worries about the fall in sterling against the euro this year 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 will most likely be the indigenous companies," McQuaid said.
He said that, after two strong rises in 2014 and 2015, the signs were that any increase this year would be significantly lower, and there was even the risk of a fall.