Fastest rise in new work in Irish manufacturing sector since May 2022
October data provided tentative signs of a turnaround in Irish manufacturing sector performance, with both production volumes and incoming new work returning to growth, according to the latest AIB Irish Manufacturing PMI. Although modest, the upturn in new orders was the strongest for nearly two and-a-half years and achieved against a backdrop of still subdued export demand.
Manufacturers stepped up their purchasing activity in response to improving order books during October, but remained cautious about staffing numbers. Meanwhile, cost inflation eased to a four-month low amid softening commodity price pressures.
Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The October AIB Irish Manufacturing PMI shows a renewed rise in activity in the sector, with the headline index rising to 51.5 from 49.4 in September. This is the fastest improvement in business conditions since February, with the upturn in the Irish manufacturing sector driven by a rise in output and new orders. The Irish manufacturing PMI remains above the flash October readings for the Eurozone and US and UK at 45.9, 47.8 and 50.3, respectively.
“Output rose in October following a contraction in three of the previous five months, with respondents citing a renewed rise in domestic demand. This was also evident in a first rise in new orders since February, but export orders continued to contract for the 9th month in succession. Firms linked this drop in orders to lacklustre demand from European clients. Hiring also fell marginally for a second consecutive month. Respondents once again linked this fall to non-replacement of departing staff. However, increased backlogs of work were recorded for the first time in two-and-a-half years. Survey respondents noted that rising volumes of new work and staff shortages in some firms, had led to an accumulation of outstanding business. Purchasing activity also accelerated to the fastest pace since May 2022.
“Price pressures eased in October, with the input and output price survey signalling a slower pace of inflation, owing in some cases to softer commodity prices. Irish manufacturers also maintained an overall positive outlook regarding activity over the coming 12 months, with sentiment rising in October. Respondents linked this to optimism around an improvement in demand and forthcoming new projects.”
