Ireland’s manufacturing sector continued its steady expansion in May, underpinned by strong domestic demand, according to the latest AIB Manufacturing Purchasing Managers’ Index (PMI). However, the survey also revealed ongoing weakness in export orders, particularly to the US and UK, two of Ireland’s key international markets.
The headline PMI figure dipped slightly to 52.6 in May, down from 53.0 in April, but remained firmly above the 50 mark that separates growth from contraction. This marks the fifth consecutive month of expansion and the most sustained period of growth for the sector in over two and a half years.
AIB noted that while domestic demand helped support new order volumes, export sales fell at their sharpest pace in five months. Manufacturers reported subdued demand from US clients and weaker sales into the UK as contributing factors. Export orders have generally remained under pressure since mid-2022, recording growth in just five of the last 24 months.
The export challenges come amid ongoing trade tensions, with uncertainty around a proposed 10% US tariff on EU goods continuing to cast a shadow. Ireland’s Department of Finance last month revised its 2025 domestic economic growth forecast downward to 2%, should the tariff be implemented. A slightly higher 2.5% forecast is expected if the tariffs are lifted.
Despite external pressures, the survey brought several positive indicators for the sector. Input cost inflation, which surged to a 26-month high in April, eased somewhat in May. However, manufacturers continued to face significant cost pressures linked to agricultural goods, raw materials, and global commodity prices. A strengthening euro against the US dollar provided some relief on import prices.
In a further sign of confidence, employment within the sector increased, with hiring rising at its fastest rate since January. Companies attributed the uptick to growing workloads and optimistic business sentiment. Nearly four in ten firms surveyed said they expect output to rise over the next year, while only 9% forecast a decline.
AIB’s Chief Economist Oliver Mangan commented that the figures show “resilience in Irish manufacturing despite global headwinds,” adding that the sector is “adapting well to shifting demand patterns and cost pressures.”
While risks remain — particularly around international trade — May’s data points to a manufacturing industry finding renewed strength at home as it navigates external uncertainties.
