January 3, 2017 / 6:05 AM / 9 months ago

Irish PMI climbs to 17-month high as manufacturers shrug off Brexit

Office buildings under construction are reflected in the water in the Capital Dock area of Dublin, Ireland December 5, 2016. REUTERS/Clodagh Kilcoyne

DUBLIN, (Reuters) - Growth in Irish manufacturing rose in December to its highest in 17 months, a survey showed on Tuesday, suggesting an initial setback after Britain voted to leave the European Union may have been short-lived.

Ireland is widely considered the EU member most at risk from the departure of Britain, its key trading partner. Manufacturing growth slowed before and just after Britain’s June referendum.

The Investec Manufacturing Purchasing Managers’ Index improved in December for the third month in a row, to 55.7 from 53.7 in November, staying above the 50 mark that separates growth from contraction for the 43rd consecutive month.

The index had slipped to its lowest in more than three years in July, reaching 50.2, when new orders dipped into negative territory. But its recovery picked up by the end of 2016, with the sub-index measuring new business rising to 57.4 from 53.2 in November.

“Today’s release shows that the sector exited 2016 with a very strong tailwind behind it, supporting our previous contention that the worst of the pressure seen in the aftermath of the UK’s Brexit vote has passed,” Investec Ireland chief economist Philip O‘Sullivan said.

“While growth slowed precipitously following the UK’s Brexit vote, the accelerated pace of expansion seen since shows the sector has gotten back on track, presumably aided by the kicker from a strong US dollar and ongoing domestic strengthening.”

O‘Sullivan said the fact that companies increased the quantity of their purchases to a 19-month high in tandem with an eighth consecutive monthly contraction in stocks of purchases was “a potent sign of confidence” that the spike in new orders could be sustained.

Growth in the Irish gross domestic product accelerated in the three months after Britain decided to quit the EU, leading

Irish Finance Minister Michael Noonan to say last month the immediate impact of Brexit had been more benign than initially

expected.

Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.

Reporting by Padraic Halpin, editing by Larry King

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