Weaker export sales weigh on Irish manufacturing sector in September
Irish manufacturers experienced another decline in new work during September, driven by the fastest fall in export sales for five months. Subdued customer demand led to a renewed decline in production volumes and cutbacks to staffing numbers. The latest AIB Ireland Manufacturing PMI® survey also pointed to strengthening cost pressures faced by goods producers, mostly due to rising prices paid for raw materials. This ushered in the strongest rate of factory gate price inflation since February 2023.
Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The September AIB Irish Manufacturing PMI shows a decline in activity in the sector, with the headline index falling to 49.4 in September from 50.4 in August. Activity has now fallen in six of the nine months so far in 2024. The deterioration in the Irish manufacturing sector was driven by a fall in output, new orders and employment, mirroring a broad-based slowdown in the sector in Europe. The Irish manufacturing PMI remains above the flash September readings for the Eurozone and US at 44.8 and 47.0, respectively, but below the UK at 51.5.
“Output fell in September for the first time since June, reflecting weak demand conditions. This was also evident in a further decline in new orders, extending a run of contraction back to March 2024. Firms linked this drop in orders to lacklustre demand and customer destocking. This was also seen in new export orders falling for the eighth successive month, with Europe cited as a key source of weakness. Hiring also fell marginally in September for the first time since December 2023. Respondents linked this fall to non-replacement of departing staff as firms right-sized in the current weak environment.
“Price pressures accelerated in September. The input price index remained close to recent peaks, reflecting higher raw material costs. Output price inflation also rose, as firms continued to pass on higher input costs to customers, despite the soft demand environment.
“Despite the subdued trading conditions, Irish manufacturers maintained an overall positive outlook regarding activity over the coming 12 months, with sentiment rising in September. Respondents linked this to optimism around an improvement in market conditions and long-term expansion plans.”
