DUBLIN, July 1 (Reuters) - - Irish factory activity shrank for the first time in six years in June as a slowdown in global trade and uncertainty over Britain's departure from the European Union finally caught up with the bloc's fastest-growing economy.
Manufacturing in Ireland hasn't contracted since May 2013, when the country was nearing the end of a three-year international bailout programme and in a period of sustained growth. The economy then became the EU's best performer for each of the following five years.
The AIB manufacturing purchasing managers index (PMI) slipped to 49.8 in June from 50.4 in May, below the 50 mark that separates growth from contraction.
It was no surprise, however, for an economy as open as Ireland's, said AIB Chief Economist Oliver Mangan, pointing to months of contraction across the euro zone, barely any growth in the sector in the United States and a steep downturn in Britain, all key trading partners for Irish firms.
"The weakness in the headline Irish PMI number is reflected in the various components," Mangan said. "There was a marked decline in new orders, partly due to Brexit uncertainty and for the second month in a row, there was a significant decline in the backlog of orders, reflecting softer demand conditions."
Anecdotal evidence from panellists attributed the second successive monthly fall in the new orders subindex, to a 34-month low of 47.4, to the continuing uncertainty over Brexit, the survey's authors said.
While Brexit has had little impact since the 2016 vote to leave, with a booming jobs market more than making up for weak manufacturing, Prime Minister Leo Varadkar warned this week that the economy could suddenly contract if Britain crashes out of the EU without a deal.
(Reporting by Padraic Halpin; Editing by Hugh Lawson)
