Ireland Manufacturing Sector Update

Ireland's manufacturing sector experienced a slight downturn in November, based on a survey released on Monday, showing a contraction in activity due to weakened new orders.

The AIB Ireland Manufacturing PMI dropped to 49.9 from 51.5 in October. A PMI score above 50 indicates growth, while a score below that reflects contraction.

This decline marks the third instance in six months that the index has dipped below 50, signaling persistent challenges within the sector.

The contraction was primarily driven by a sharp drop in new orders, the steepest decline since June. Manufacturers pointed to fragile consumer demand and subdued global economic conditions as contributing factors.

Despite the overall contraction, production volumes increased for the fourth time in five months, reaching their fastest pace since February. Some firms linked this rise to efforts aimed at rebuilding inventories.

Employment in the sector has decreased for the third consecutive month, with job shedding occurring at its fastest rate since June 2023. Companies often attributed this to not replacing voluntary leavers due to adequate capacity.

Input cost inflation has eased to a five-month low, yet output charge inflation has accelerated, reflecting manufacturers' efforts to transfer higher costs to customers.

> "The rate of inflation for input costs eased for the second straight month. However, output charge inflation accelerated to its second-highest reading since March 2023," remarked David McNamara, AIB Chief Economist.

Looking forward, manufacturers express optimism, with 46% anticipating output growth over the next 12 months, although this optimism has slightly waned since October. Some firms raised concerns regarding competitive pressures and the overall economic environment.