Manufacturing & Supply Chain

2025 commenced on a solid note, with the Irish manufacturing sector recording an improvement in operating conditions for the first time in three months, according to the AIB Ireland Manufacturing PMI® for January 2025. Fresh expansions were noted for both new orders and output. More positively, confidence for the year ahead outlook remained strongly optimistic, with many businesses planning to expand capacity. Consequently, employment was raised at a solid and accelerated pace. However, purchasing activity continued to fall, with a still subdued business environment and elevated inventories leading to weaker input buying.

Commenting on the survey results, David McNamara, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI indicated that the sector started the year on a firmer footing, with the index rising to 51.3 from 49.1 in December. This marks the first monthly expansion since October. The rise in January was due to renewed growth in output and new orders. The Irish manufacturing PMI remains above the flash January readings for the Eurozone, US and UK at 46.1, 50.1 and 48.2, respectively.

“Output rose modestly in January, following a sharp contraction in December. This was underpinned by renewed growth in new orders, but respondents did note continued weakness in client demand. This weakness was reflected in a fall in export orders, with shipping delays said to have dampened external sales. Despite the muted demand backdrop, hiring accelerated to the fastest rate since August 2024, as firms’ plans for expansion spurred a rise in employment. However, despite the positive signs on employment, purchasing activity and stock building by firms continued to decline in January.

“The rate of inflation for input and output costs increased in January. Respondents noted demand was strong enough to offset price hikes on the input side relating to raw materials with higher prices for customers. Irish manufacturers maintained an upbeat assessment of the outlook for activity levels over the coming year. Around 46% predict an increase in output over the course of 2025, while only 6% forecast a reduction. Businesses were hopeful of improved demand conditions, both from domestic and international clients, and many noted plans for capacity expansions.”