Manufacturing & Supply Chain

April data highlighted a robust upturn in Irish manufacturing production, supported by a further acceleration in new order growth to its strongest for three years. Domestic demand was the main factor boosting manufacturing workloads as export sales dipped slightly since March, according to the AIB Ireland Manufacturing PMI® for April 2025. Survey respondents commented on headwinds from US tariffs and rising global economic uncertainty, but there were also reports of improving demand from European clients. Squeezed margins remained a challenge for goods producers, with input cost inflation hitting a 26-month high in the latest survey period.

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 53.0 in April, up from 51.6 in March, the seasonally adjusted AIB Ireland Manufacturing PMI posted above the neutral 50.0 threshold for the fourth consecutive month and signalled a solid improvement in overall business conditions. The latest reading was the highest since June 2022, largely reflecting robust and accelerated rates of output and new business growth in April.

Production volumes and incoming new work both increased at the fastest pace for three years. Manufacturers noted resilient demand conditions, especially in domestic markets, and relatively robust sales pipelines. Some firms suggested that economic uncertainty linked to US tariffs had led to delayed decision-making among clients, however, particularly in relation to major capital spending projects.

April data highlighted a renewed downturn in export order books, following a solid expansion in the previous survey period. Anecdotal evidence pointed to a mixed picture across major global regions, with softer US demand offsetting rising spending by clients in Asia and Europe.

Manufacturers indicated a rebound in input buying during April, driven by improving order books, with the rate of expansion the fastest since May 2022. However, destocking continued across the manufacturing sector as firms continued to focus on tighter working capital management. Stocks of purchases decreased for the eighth month in a row, while post-production inventories fell at the steepest pace since August 2021.

Suppliers’ delivery times shortened for the first time since August 2024, although the improvement in vendor performance was only marginal. Survey respondents typically commented on the impact of subdued global demand for raw materials and spare capacity among suppliers.

Despite signs of an improved balance between demand and supply, latest data highlighted a sharp rise in average cost burdens at manufacturing companies. The overall rate of input price inflation was the steepest since February 2023. Survey respondents reported higher prices paid for a range of purchases, especially energy-intensive raw materials and precious metals, alongside efforts by suppliers to pass on higher labour costs. However, prices charged by manufacturers increased only moderately, with the rate of inflation holding close to the eight-month low seen in March.

Meanwhile, backlogs of work across the manufacturing sector decreased again in April. The latest reduction was the fastest so far in 2025. Goods producers mostly commented on successful efforts to work through unfinished orders, supported by a gradual rise in staffing numbers. Manufacturing employment increased for the fifth successive month in April, albeit at a modest rate.

Finally, the latest survey indicated that manufacturers remained optimistic about their growth prospects for the year ahead. Around 35% of the survey panel predict a rise in production volumes, while only 9% forecast a decline. However, this translated to the lowest overall degree of positive sentiment since August 2024. While goods producers noted that the recent turnaround in sales pipelines had supported business confidence, there were also a number of reports citing concerns about global economic prospects and the impact of US tariffs.

Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI indicated that the sector’s upturn accelerated in April, with the index rising to 53.0 from 51.6 in February – its highest level since June 2022. The rise in April was broad-based, with robust growth in output and new orders, and signs of stock building amid tariff uncertainty. The Irish manufacturing PMI remains above the flash April readings for the Eurozone, US and UK at 48.7, 50.7 and 44.0, respectively.

“Output rose robustly in April, amid a general rebound in domestic demand conditions. This was reflected in accelerated growth in new orders to a 3-year high. Nonetheless, some respondents noted that US tariffs had led to delayed decision-making on major investments, dragging down export orders in April. Employment expanded, albeit at a modest pace as firms remained cautious in hiring activity. The purchases index rose to its highest level since May 2022, signalling a sharp upturn in input buying by firms. Some commented on efforts to pre-purchase critical inputs in response to heightened global trade uncertainty.

“Manufacturers indicated an accelerated increase in their input prices during April, with the index pointing to the fastest pace of inflation since February 2023. Higher input prices were linked to raw material costs and rising energy prices. Nonetheless, output price inflation remains broadly unchanged, signalling some margin squeeze in the sector. Despite ongoing geopolitical and tariff uncertainty, Irish manufacturers maintained a generally upbeat assessment of the outlook for activity levels over the coming year. 35% of the respondents predict a rise in output levels during the year ahead, while 9% expect a decline.”