Stronger export sales boost Irish manufacturing production in January
Manufacturing output rose to the greatest extent since May 2022, albeit only marginally, accordingly to the latest AIB Ireland Manufacturing PMI® for January 2024. Production growth was supported by an increase in new work from abroad, alongside efforts to clear backlogs. Employment also returned to growth in January, but manufacturers continued to report a sharp downturn in purchasing activity amid caution about underlying demand conditions.
Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The January AIB Irish Manufacturing PMI survey shows improvement for the sector overall, with the headline index rising to 49.5 from 48.9 in December. However, the index remains below the 50 no-change level, signalling another marginal fall in activity during the month. Nonetheless, the Irish PMI remained well above the flash January readings for the Eurozone and UK, of 46.6 and 47.3, respectively.
“A rise in output, export orders and employment, alongside marked destocking, were the key features of the January PMI survey. While new orders fell again in January owing to weaker domestic demand, export orders rose for a second consecutive month and at the fastest pace in nearly two years. Higher demand in Europe and Asia were cited as factors in the rebound. Manufacturing production also rose at the fastest pace since May 2022.
“However, firms continued to pursue inventory reduction strategies against a backdrop of subdued customer demand. This was reflected in further sharp falls in stocks of both inputs and finished goods, with the former declining at the sharpest pace in over three years amid a steep drop in the purchasing of inputs. Input price growth also eased during the month, with respondents reporting lower raw material and energy prices. These price declines offset higher shipping costs and supplier price hikes linked to increased delivery times due to trade disruptions on items shipped via the Red Sea.
“Manufacturers remained broadly optimistic about the outlook for the year ahead as firms linked this optimism to investment in new products and expectations of a broader upturn in demand. However, the business expectations index still fell to its lowest level since May 2023 due to ongoing global economic uncertainty.”
