Manufacturing & Supply Chain

The AIB Ireland Manufacturing PMI® survey for February 2024 indicated strengthening business conditions, with production growth accelerating to the highest for 22 months amid a renewed improvement in order books. Staffing numbers also expanded in February as manufacturers sought to boost production schedules and support long-term business development plans. There was a degree of caution about the business outlook, however, as survey respondents recorded the lowest level of optimism since April 2023 amid lingering concerns about broader economic prospects at home and abroad.

Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The February AIB Irish Manufacturing PMI survey shows a marked improvement for the sector, with the headline index rising to 52.2 from 49.5 in January, the first expansion in six months. This is also the highest level for the index since June 2022, and reflects a significant pick-up in output in the sector in February. The Irish PMI remains well above the flash February readings for the US, Eurozone and UK, of 51.5, 46.1 and 47.1, respectively.

“A sharp rise in output and employment, alongside renewed new orders growth were the key features of the February PMI survey. The Output Index rose to its highest level since April 2022, on the back of a strong upturn in domestic demand, with new orders rising for the first time in three months. While new export orders were lower, owing to softer UK demand, the decline was marginal on the month. The rise in output and new orders in the sector prompted manufacturers to take on new staff at an accelerated pace.

“This recovery also spurred an upturn in new purchases of inputs by the sector, with this index rising for the first time since June 2022. However, stocks of purchases and finished goods did continue to decline as manufacturers managed inventories conservatively after a sustained period of weak client demand in recent months.

“In an otherwise positive survey, a concerning trend is the continued disruption to shipping routes in the Red Sea, to which respondents attributed longer delivery times and higher input prices in February. This also drove the first increase in output prices since April 2023.

“Manufacturers remained broadly optimistic about the outlook for the year ahead as firms linked this optimism to expansion plans and stronger client demand. However, the business expectations index still eased to its lowest level since April 2023 due to ongoing economic uncertainty.”