Ireland’s manufacturing sector saw a slight decline in November, according to the latest data, as new orders weakened and economic conditions remained challenging.
The AIB Ireland Manufacturing Purchasing Managers’ Index (PMI) dropped to 49.9 in November, down from 51.5 in October. A PMI reading above 50 indicates growth, while a reading below 50 signals contraction. This marks the third time in the past six months that the index has fallen below the 50 mark, reflecting ongoing struggles within the sector.
The downturn was primarily driven by a sharp drop in new orders, which recorded their steepest decline since June. Manufacturers pointed to fragile consumer demand and subdued global economic conditions as key factors behind the slowdown. Despite this, production volumes increased for the fourth time in five months, reaching the fastest pace since February. Some companies attributed this increase to efforts to rebuild inventories.
However, employment within the sector continued to decline, with job shedding accelerating for the third consecutive month. The rate of job losses was the highest since June 2023, with firms citing the non-replacement of voluntary leavers as a key factor. This was due to companies feeling they had sufficient capacity within their current workforce.
Inflation in input costs eased to a five-month low, providing some relief to manufacturers. However, output charge inflation picked up, as companies sought to pass on higher costs to customers. David McNamara, AIB’s Chief Economist, noted that while input cost inflation slowed for the second consecutive month, output charges increased to their second-highest level since March 2023.
Looking ahead, manufacturers remain cautiously optimistic about the future. AIB’s survey showed that 46% of manufacturers expect output growth over the next 12 months, although this optimism has moderated compared to October. Some companies expressed concerns about increasing competitive pressures and the uncertain global economic environment, which could influence their performance in the coming months.
Overall, while Ireland’s manufacturing sector faces challenges, there are signs of resilience, with production continuing to grow and companies focusing on inventory rebuilding in response to shifting market conditions.
