Ireland's manufacturing sector grew slightly for the second straight month in February after a big dip at the start of the year as Brexit and a third COVID-19 lockdown of the economy hit output and new orders, a survey showed on Monday.
The AIB IHS Markit manufacturing Purchasing Managers' Index (PMI) edged up to 52.0 from 51.8 in January, above the 50.0 level that separates expansion from contraction but well down from December's 57.2.
Last month's reading was still far higher than the 36.0 recorded during the initial lockdown of the economy in April. The manufacturing sector has been allowed to operate during subsequent lockdowns.
Output and new orders fell for the second month running while supply chains remained under severe pressure, with Britain's exit from the European Union's trading orbit widely cited as the main cause of delays.
Rising administration and transport costs as a result of Brexit as well as upward pressure on raw materials prices are also generating more inflationary pressure, they added.
However, employment in the sector continued to rise and sentiment remained strong as firms looked beyond the crisis to a revival in demand later in 2021.
"Tight COVID lockdown restrictions, both here and elsewhere, are creating a challenging backdrop for businesses, with firms reporting weak demand and thus falling new orders in Ireland and from the UK," said AIB chief economist Oliver Mangan.
"On a more positive note, firms expect the rollout of COVID vaccines to bring an improvement in economic conditions as lockdown restrictions are lifted during the course of the year."