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Manufacturing & Supply Chain

Deteriorating operating conditions for Irish manufacturing

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Deteriorating operating conditions for Irish manufacturing

Deteriorating operating conditions for Irish manufacturing
January 04
09:43 2023
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The Irish manufacturing sector recorded a second month of deteriorating operating conditions in December as new orders fell sharply, according to the latest AIB PMI® data. The contractions in new and outstanding work accelerated, while output fell more slowly and stocks of both inputs and finished goods built up. Pressure on supply chains eased further, leading to the slowest round of input price inflation since February 2021.

Commenting on the survey results, Oliver Mangan, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI remained in contraction territory in December for the second month running, with the headline index unchanged from November at 48.7. This points to a continued deterioration in business conditions in the sector, with new orders in particular falling sharply. The weak PMI reading of 48.7 is broadly into line with the trend seen elsewhere, though the pace of contraction is not as marked in Ireland – the flash manufacturing PMIs stood at 46.2, 47.8 and 44.7 in the US, Eurozone and UK in December.

“Orders have been in decline since June reflecting weakening demand. This has resulted in the downturn in manufacturing activity seen in the closing two months of the year. As noted, there rate of decline in new orders was quite marked in December, though much less so for new export orders. Falling orders led to another drop in output, the sixth decline in the past seven months.

“Meanwhile, stocks of finished goods rose for the sixth month running. Stocks of inputs also continued to rise, while order backlogs fell for an eighth consecutive month as firms cleared outstanding work. On a more positive note, employment rose, albeit only marginally. In terms of the 12-month outlook, sentiment also improved, though it remains at a historically subdued level.

“There was a further easing of supply chain pressures, with only 12% of firms reporting longer suppliers’ delivery times. Meantime, the rate of input price inflation while still elevated, continued to ease, hitting a 22-month low. Output price inflation also remained high, accelerating in December, though still at the second lowest level in the past 19 months.”

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