Irish Manufacturing output growth accelerates to one-year high in February
Irish manufacturers recorded a sustained rebound in production volumes in February, with growth accelerating to its fastest for 12 months amid a moderate uplift in new business intakes. The latest increase in total new work was the fastest recorded since May 2022, which helped to support another expansion of staffing numbers and a renewed upturn in purchasing activity. according to the AIB Ireland Manufacturing PMI® for February 2025. However, input cost inflation intensified as suppliers sought to pass on rising raw material prices and greater salary payments. The overall rate of input price inflation was the steepest for two years in February.
The headline AIB Ireland Manufacturing PMI® is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.
At 51.9 in February, up from 51.3 in January, the seasonally adjusted AIB Ireland Manufacturing PMI® posted above the neutral 50.0 threshold for the second month running and signalled a moderate improvement in overall business conditions. The latest reading was the highest for one year, which was largely due to faster rates of output and new business growth.
February data indicated a solid expansion of production volumes across the manufacturing sector. Survey respondents commented on a general improvement in customer demand, especially across domestic markets. This resulted in the strongest rate of new business expansion for just under three years.
Export sales stabilised in February, which ended a twelve-month period of contraction. Manufacturers typically noted a boost from rising sales to US clients, but this was offset by reports of weak demand across the UK and euro area.
Greater overall workloads and efforts to fulfil long-term business expansion plans encouraged a further increase in staffing numbers during February. Higher levels of employment have been recorded in each of the past three months, although the rate of job creation eased since January.
Backlogs of work were accumulated for the first time in four months and at the sharpest pace since April 2022. This was generally attributed to improving order books and, in some cases, the impact of longer wait times for raw materials. Supplier performance has now deteriorated for six consecutive months. Manufacturers again cited international shipping delays in February.
Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI indicated that the sector’s upturn sustained in February, with the index rising to 51.9 from 51.3 in January. This marks the fastest pace of growth in 12 months. The rise in February was due to stronger growth in output and new orders, and a renewed upturn in purchasing activity. The Irish manufacturing PMI remains above the flash February readings for the Eurozone, US and UK at 47.3, 51.6 and 46.4, respectively.
“Output rose robustly in February, amid a general improvement in demand conditions. This was reflected in accelerated growth in new orders, but respondents did note continued softness in external demand. This weakness was evident in stagnant export orders, with subdued European demand cited. Hiring expanded in February, albeit at a slower pace than last month, as firms planned for higher expected output. Encouragingly, purchasing activity also rose for the first time since November 2024, as firms reacted to stronger client demand.
“The rate of inflation for input and output costs remained heightened in February. Respondents noted a general uplift in input prices, linked to raw materials and energy costs. On the output side, prices rose at the fastest pace since September 2024, as firms sought to protect margins. Irish manufacturers maintained a generally upbeat assessment of the outlook for activity levels over the coming year. Around 40% predict an increase in output over the next 12 months, while 10% forecast a reduction. That said, there remained lingering concerns around the broader global economic outlook.”
