Irish firms operating in sectors deemed to be most atrisk1 from Brexit showed signs of stress throughout2018, according to PMI data from IHS Markit.
With ten weeks to go until the UK is due to leave the EU andTheresa May's Brexit deal rejected by the UK parliament,uncertainty among Ireland's most vulnerable firms is likely to beheightened in the near-future.
Divergence with 'least exposed' sectors growssharply
A recovery in output enjoyed by firms most exposed to Brexit in2017 largely failed to continue last year, with the gap inperformance between the 'most exposed' and 'least exposed' sectorsbecoming much larger, especially in late-2018. December saw the PMIsurvey's Output Index for the 'most exposed' sectors run some 7.7points below that for the 'least exposed' sectors, the fourthgreatest divergence seen since the EU referendum. The final quarterof the year consequently saw the average rate of output expansionease notably. Indeed, contractions in output were recorded inOctober and December 2018.
The outperformance of the 'least exposed' sectors compared totheir peers in 'more exposed' industries was also evident withregards to inflows of new business. December saw the PMI New OrdersIndex for the 'most exposed' sectors drop 5.9 index points belowthat for the 'least exposed', a much greater divergence than theaverage of 3.8 index points seen since the start of 2001. A similardivergence was seen with the rates of job creation and businesssentiment.