Irish manufacturing suffers record falls in output and new orders in April as coronavirus pandemic worsens
The April AIB PMI® survey of Irish manufacturers revealed a deepening downturn in the sector at the start of the second quarter of 2020, as the economic fallout from lockdowns imposed across Europe and the wider world led to a collapse in demand. Output, new orders, exports and purchasing all fell at the fastest rates in the 22-year survey history. Jobs were shed at the joint-fastest rate on record and the 12-month outlook deteriorated further.
Commenting on the survey results, Oliver Mangan, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI data for April paint a bleak picture of the impact on the sector of the lockdowns associated with the coronavirus pandemic. The headline index declined sharply to 36.0 from 45.1 in March, with the 9.1 point fall in the month the largest on record. “The Irish figures are no surprise as they are in line with global trends. The flash readings for the Eurozone, UK and US manufacturing PMIs for April show declines to 33.6, 32.9 and 36.9, respectively, similar readings to Ireland. There were some glimmers of hope in the very weak Irish data. There was a smaller decline in the new orders index than in March, while the fall in the future output index was very modest in April, having plunged in March. The data will improve as lockdown restrictions are eased.”
The headline AIB Ireland Manufacturing PMI® is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.
The PMI plummeted to 36.0 in April, from 45.1 in March, the lowest since March 2009. The month-on-month decline in the headline figure, at 9.1 points, was a new survey record, easily beating March’s 6.1-point fall. The latest figure was the third-lowest on record, behind February 2009 and March 2009.
As was the case in March, the level of the PMI was supported by a record lengthening of suppliers’ delivery times, the index for which is inverted in the PMI calculation as longer times are usually associated with improving demand. With a 15% weight, the 13.3-point drop in the suppliers’ delivery times index boosted the PMI by 2 points.
A truer picture of the severity of the hit to manufacturing activity in April was provided by the indices for output and new orders, accounting for 55% of the PMI weight. Both hit record lows during the month, signalling rates of decline that were unprecedented in at least 22 years. The output index fell a record 21.8 points, eclipsing March’s drop. More encouragingly, new orders declined at a slower rate than production, as the respective index posted a less marked month-on-month drop than in March.
Manufacturing employment also weighed heavily on the headline PMI in April. The rate of job shedding, already sharp in March, accelerated to the joint-fastest in the 22-year
survey history, matching the pace recorded in February 2009.
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